White House announces extended moratorium on lockdown, HUD delays service reviews
Joe Biden’s administration announced Thursday that a moratorium on foreclosures and evictions, which is due to expire at the end of this month, will be extended by 30 days and will now take place on July 31, 2021. This is according to a series announcements issued by federal agencies, including the United States Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA), the United States Department of Agriculture (USDA) and the Office of Financial Protection of consumers (CFPB) in concert with the White House.
While much of the new homelessness efforts through the extension of these moratoriums focus on tenants, landlords are also designed to benefit from these actions if they have mortgages guaranteed by them. relevant federal agencies, according to the White House.
HUD also announced Thursday that previously outlined revisions to mortgage management and loss mitigation policies on both sides of the business will have their implementation dates delayed. These changes, originally slated for implementation in August, include the codification of new reverse mortgage policies as well as the total or partial cancellation of certain Mortgage Letters (LMs) that apply to the Home Equity Conversion program. Mortgage (HECM).
Relief for homeowners in the extension of time
The deadline for seizures has already been extended several times during the COVID-19 coronavirus pandemic, but the White House aims to clarify that the extension in today’s announcement will represent the last time that deadline will be. repelled.
“Three federal agencies that support mortgages – [HUD, VA, and USDA] – will extend their respective lockdown moratorium for one, last month, until July 31, 2021 â, indicates the announcement of the White House. “The Federal Housing Finance Agency (FHFA) will also announce that it has extended the moratorium on foreclosures for mortgages guaranteed by Fannie Mae and Freddie Mac until July 31, 2021.”
Relief for homeowners and tenants who are still recovering from the economic impact of the pandemic simply requires extra time to get back on their feet, the announcement says, and the government is opposed to a deadline that could make situations worse. housing for vulnerable populations.
“Once the moratoriums are completed, HUD, VA and USDA will take additional steps to prevent foreclosures on mortgages guaranteed by these agencies until borrowers are reviewed for COVID-19 Simplified Loss Mitigation options which are affordable, while the FHFA will continue to work with Fannie Mae and Freddie Mac to ensure borrowers are assessed for home retention solutions before any referral to foreclosure, âthe White House said.
For homeowners who have yet to take advantage of the various forbearance options the government has made available to clients with government guaranteed mortgages, the relevant support agencies will extend the deadline for borrowers who need to explore these. options at a later time in the year. , as well as.
âHUD, VA and USDA will also continue to allow homeowners who have not yet taken advantage of forborne to enter into COVID-related forborne until September 30, 2021, while homeowners with mortgages backed by Fannie Mae or Freddie Macs who have COVID-related hardship mortgages will also continue to be eligible for COVID-related forbearance, âthe White House said. “Finally, HUD, VA and USDA will announce additional measures in July to provide borrowers with payment reduction options that will allow more homeowners to stay in their homes.”
Delay in new maintenance guidelines
In late April, HUD released an update for upcoming revisions to the Federal Housing Administration (FHA) Single-Family Housing Policy Manual 4000.1, which also includes the latest version of the FHA Defect Taxonomy, detailing many ways that term and reverse mortgages could fail approval based on a series of scenarios relating to inadequate or insufficient documentation.
On Thursday, with the release of ML 2021-14, the FHA announced that the implementation date for the previously described changes to the manual that mortgagees must use will be pushed back from August 17, 2021 to March 31, 2022. The reason for the update a time frame was also given in this case due to the need for additional recovery time due to the economic impact of the pandemic.
“Due to the continuing COVID-19 pandemic, mortgage creditors are aware of a large number of borrowers affected by COVID-19 seeking loss mitigation assistance,” the new ML reads in part. âHUD recognizes that the resources required to implement the changes to Manual 4000.1 can cause delays in helping borrowers resolve their defaults and avoid foreclosure. To mitigate the impacts on both borrowers and mortgagees, HUD is extending the implementation date to give mortgagees more time to implement the changes.
The previous guidelines pointed out that some MLs that had been issued in the past will be replaced by the new guidelines in the Manual, in whole or in part. For those who are fully replaced, these are all relatively recent versions, all but one having been transmitted under the administration of Donald Trump and former HUD secretary Dr. Ben Carson. The only exception to this rule is Law ML 2021-04, published on January 26 of this year and which extended and updated the guidelines for forbearance applications for mortgage borrowers who have been affected by the economic effects. of the COVID-19 coronavirus pandemic, including the delay in due and payable applications for HECM loans.
The other two fully replaced LMs (2020-48 which applied mainly to prefabricated houses and 2019-18 which concerned 203,000 limited mortgages respectively) have no impact on the HECM program.
For partially replaced MLs, ML 2021-05 issued in February similarly addressed foreclosure and eviction moratoria put in place for single-family term and reverse mortgages from the FHA. ML 2020-38 dealt with updates to the FHA Catalyst Software Claims Module and does not appear to have a significant impact on the HECM program.
Read the White House announcement on the moratorium extension and ML 2021-14 at HUD.