Today the Biden administration announced an extension of the moratorium on foreclosure on federal mortgage loans (the “Presidential Announcement”). To implement the president’s announcement, federal agencies (i.e. HUD / FHA, USDA, and VA) and GSEs (i.e. Fannie Mae and Freddie Mac) have announced (or are expected to announce) an extension of the moratorium on enforcement through July 31 . 2021.
Announcement by the President
According to the president’s announcement, the three federal agencies that support mortgages – the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA), and the Department of Agriculture (USDA) – will increase their respective moratoriums on foreclosure by one , last month ending July 31, 2021. Similarly, the Federal Housing Finance Agency (FHFA) will announce that it has extended the moratorium on foreclosure on mortgages backed by Fannie Mae and Freddie Mac to July 31, 2021.
The president’s announcement went on to say that after the moratoriums end, HUD, VA and USDA will take additional steps to prevent foreclosures on mortgages secured by these agencies until borrowers are screened for COVID-19 optimized loss mitigation options, which are affordable, while FHFA will continue to work with Fannie Mae and Freddie Mac to ensure borrowers are screened for home tie solutions prior to referral for foreclosure.
Additionally, the president’s announcement notes that HUD, VA and USDA will also continue to allow homeowners who have not previously used the forbearance to take a COVID-related forbearance until September 30, 2021, while homeowners with Fannie Mae or Freddie Mac -secured mortgages with COVID-related hardship will continue to be eligible for COVID-related deferral.
Finally, the president’s announcement suggests that in July, the HUD, VA, and USDA will announce additional steps to offer borrowers options to cut payments that will allow more homeowners to stay in their homes.
Federal Office and GSE communications
In addition to the foregoing, the USDA and GSEs today issued the following guidance on implementing the President’s announcement:
- USDA: Today the USDA issued a letter Press release Announcing a one-month extension of the moratorium on foreclosure of real estate funded by USDA single-family homes direct and guaranteed loans through July 31, 2021. Beyond July 31, 2021, the USDA announced that it would have homeowners resigned as a result of the Pandemic in financial need will continue to provide assistance by providing loss containment options to keep them in their homes.
- Fannie Mae LL-2021-02: Today Fannie Mae updated LL-2021-02 Extend the moratorium on foreclosures on Fannie Mae loans until July 31, 2021. In particular, servicers must continue to suspend the following foreclosure-related activities through July 31, 2021. Servicers may not do so, except in relation to vacant or abandoned property: (1) initiate judicial or extrajudicial enforcement proceedings, (2) apply for a foreclosure judgment or a sale order, or (3) carry out foreclosure. All other guidelines in LL-2021-02 remain the same.
- Freddie Mac Guide Bulletin 2021-23: Similarly, Freddie Mac exhibited today Guide Bulletin 2021-23, which announces an extended entry into force for the moratorium on COVID-19 foreclosure. In particular, Freddie Mac is extending the moratorium on foreclosure last announced in Guide Bulletin 2021-8. Servicers must suspend all foreclosure actions, including foreclosure sales, by July 31, 2021. This includes the initiation of judicial or extrajudicial enforcement proceedings, an application for a foreclosure judgment or a sale order. This foreclosure stay does not apply to mortgages on properties that are found vacant or abandoned.
To date, we are not aware of any formal announcements from the HUD or VA regarding the implementation of the president’s announcement. However, we anticipate that both HUD and VA will be issuing guidelines in line with the announcement above in a short period of time.
Today’s announcements indicate that, with the exception of vacant and abandoned properties, all foreclosure-related activities that involve the initiation of judicial or extrajudicial foreclosure proceedings, an application for a foreclosure judgment or sale order, or the execution of a foreclosure sale should be carried out by the end of the extended enforcement moratorium will continue to be paused. Additionally, the president’s announcement suggests that federal agencies will issue additional guidance that borrowers who have not yet exercised COVID-19 forbearance can do so by 30 ways to allow more homeowners to stay in their homes Accordingly, service providers should continue to look out for additional guidance from federal agencies and GSEs regarding the moratorium on foreclosure or other COVID-19-related borrower relief.