FHA, Fannie Mae, and Freddie Mac recently released COVID-19 related updates regarding maintenance. FHA released Mortgage letter 2021-15Issued to Freddie Mac Newsletter 2021-23, and Fannie Mae updated Lender Letter 2021-02, all of which are extending the previously announced moratoriums on foreclosure until July 31, 2021. The moratorium on each of them requires the service providers to suspend all enforcement actions, including foreclosure sales, the initiation of judicial or extrajudicial foreclosure proceedings, and a motion for a judgment or an order to enforce the sale. This restriction does not apply to mortgages on land that are considered empty or abandoned.
In ML 2021-15, the FHA also updated certain requirements and flexibilities regarding borrowers affected by COVID-19, including:
- Updated the FHA’s forbearance policy by extending the date for requesting an initial forbearance to September 30, 2021 so that between July 1, 2021 and September 30, 2021 (i) borrowers requesting an initial forbearance of COVID-19 for most of the time a six month deferral or suspension period, and (ii) borrowers who begin their initial deferral will receive an additional three month extension of the COVID-19 deferral;
- Introducing a new COVID-19 early loan modification policy that obliges mortgage borrowers to screen eligible borrowers for a permanent change in one or more conditions of the borrower’s mortgage that results in a reduction in the borrower’s monthly principal and interest payment by at least 25%, which does not require contact of the borrower; and
- Extension of the deadline to September 30, 2021 for HECM borrowers to request an extension before the servicer can apply for the loan to mature so that between July 1, 2021 and September 30, 2021 (i) borrowers who have a the initial extension will be extended for a maximum of six months; and (ii) Borrowers whose initial HECM extension period began between July 1, 2020 and September 30, 2020, will receive an additional three-month extension.
In addition, in LL-2021-02, Fannie Mae also addressed the gap between the expiration of the foreclosure moratorium (i.e. July 31, 2021) and December 31, 2021. problematic The CFPB’s Final Rule, entitled “Protective Measures for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Law” (the “Final Rule”). The final rule will, among other things: (i) introduce certain temporary procedural safeguards to ensure that borrowers have a meaningful opportunity to be screened for loss mitigation before servicers initiate initial notice or filing for foreclosure of certain mortgages; and (ii) service providers Temporarily allow borrowers affected by COVID-19 hardship to offer certain loan modifications based on the assessment of an incomplete application. In LL-2021-02, Fannie Mae prohibits servicers from taking any action between July 31, 2021 and August 31, 2021 that would violate the definitive rule if it were in effect during that period.
Finally, LL-2021-02 also announces updated rules on the suspension of foreclosure activities and filing requests for exemption from automatic suspension in certain bankruptcy cases.
See the previous report by the WBK on the foreclosure moratoria Here.