On February 16, 2021, President Biden announced an extension of the foreclosure moratorium and the availability of forbearance relief for Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA), and U.S. Department of Veterans Affairs single-family home loan borrowers experiencing financial hardship due to COVID-19. As previously reported, the Federal Housing Finance Agency (FHFA) recently announced the extension of the foreclosure moratorium and the availability of forbearance relief for Fannie Mae and Freddie Mac single-family home loan borrowers.
For FHA, USDA, and VA borrowers, the foreclosure moratorium is extended through June 30, 2021. Additionally, borrowers who entered into a forbearance on or before June 30, 2020 may receive an additional six months of mortgage payment forbearance, in three-month increments. Borrowers who are not in a forbearance may now request a COVID-19 forbearance through June 30, 2021.
The actions by President Biden are addressed by the U.S. Department of Housing and Urban Development (HUD) in Mortgagee Letter 2021-05, by the USDA in Release No. 0026.21, and by the VA in Circular 26-21-04 and Circular 26-21-05.
Borrowers who are not in a forbearance and request a COVID-19 forbearance by June 30, 2021 may receive an initial forbearance of up to six months, and an additional forbearance of another six months (the USDA refers to the periods as being 180 days). The agencies advise that the eviction moratorium also is extended through June 30, 2021, and that the foreclosure and eviction moratoriums do not apply to properties determined to be legally vacant or abandoned. The agencies also advise that for borrowers in a COVID-19 forbearance, the servicer must waive all late charges, fees and penalties.
HUD and VA advise that (1) for borrowers currently in a forbearance who request an additional forbearance period, no extended forbearance period may continue beyond December 31, 2021, and (2) for borrowers not in a forbearance who request a forbearance by June 30, 2021, the forbearance period may not extend beyond June 30, 2022.
HUD also addresses various permanent loss mitigation and home disposition options, and advises that it is removing the restriction on borrowers receiving more than one COVID-19 home retention option.