On March 18, the Federal Housing Finance Agency (FHFA) announced the suspension of foreclosures and evictions for mortgages backed by Fannie Mae and Freddie Mac (the Enterprises) to help borrowers who are at risk of losing their home. The suspension will last for at least 60 days and applies to homeowners with an Enterprise-backed single-family mortgage. Earlier in the month, FHFA announced that the Enterprises would provide payment forbearance to borrowers impacted by the coronavirus. Forbearance allows for a mortgage payment to be suspended for up to 12 months due to hardship caused by the coronavirus.
“This foreclosure and eviction suspension allows homeowners with an Enterprise-backed mortgage to stay in their homes during this national emergency," said FHFA Director Mark Calabria in a press release. Calabria also reminded borrowers who are having difficulty paying their mortgage as a result of COVID-19 to contact their mortgage servicers as soon as possible. “The Enterprises are working with mortgage servicers to ensure that borrowers facing hardship because of the coronavirus can get assistance," he said in the release.
Fannie and Freddie also pledged to provide forbearance of up to 12 months to borrowers impacted by the coronavirus outbreak. Borrowers who take advantage will see their obligations suspended until their income bounces back and their payments resume. The forbearance option applies not only to primary residences, but also second home and investment properties.
Vocabulary Primer for Consumers:
- Forbearance Agreement: allows for a mortgage payment to be suspended for up to 12 months due to hardship caused by the coronavirus.
- Waiver Agreement: frees the borrower from the obligation to make the affected payments
In conjunction with FHFA’s statement, the U.S. Department of Housing and Urban Development (HUD) announced a moratorium on foreclosures and evictions for single-family homeowners with FHA-insured mortgages. Like the FHFA suspension, HUD’s moratorium will last for 60 days (through May 19, 2020). “Today’s actions will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes, and help steady market concerns,” said HUD Secretary Ben Carson in a press release. “The health and safety of the American people is of the utmost importance to the Department, and the halting of all foreclosure actions and evictions for the next 60 days will provide homeowners with some peace of mind during these trying times.”
The guidance applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages. The guidance directs servicers of those mortgages to halt all new foreclosure actions and suspend all foreclosure actions currently in process as well as cease all evictions of persons from FHA-insured single-family properties.
CFPB Director Kathleen Kraninger issued a statement commending FHFA and HUD for taking this action. “Consumers’ first stop in the face of hardship is with their creditors and their financial institutions,” Kraninger said in the statement. “I will continue to work with our Federal and State partners, and seek feedback from stakeholders, to ensure we are providing appropriate flexibilities to benefit consumers during this time.”