Note: This post was updated on Aug. 28 2020 to reflect recent developments.
First of all, this is a good thing.
At the start of COVID-19, the Federal Housing Finance Agency (FHFA) and announced a foreclosure and eviction moratorium is effective for at least 60 days on all enterprise-backed single-family mortgages.
The Department of Housing and Urban Development (HUD) also announced its official policy, stating that the Federal Housing Administration is enacting an “immediate foreclosure and eviction moratorium for single-family homeowners with FHA-insured mortgages.”
Meanwhile, borrowers with US Department of Agriculture (USDA) single-family housing Direct and Guaranteed mortgages were given a moratorium on foreclosures for 60 days starting at the end of March 2020, as were those with loans from the US Department of Veterans Affairs.
Update: As of August 2020, the FHA and FHFHA moratoriums were extended through December 31.
What does this mean for you?
You still need to pay your mortgage (if you can).
If you are worried about or cannot make your mortgage payments, the good news is that the moratorium is making it possible for you to stay in your home amidst the coronavirus crisis. Foreclosures and evictions have been suspended until the end of April.
If you’re currently in foreclosure, your home cannot be sold at a foreclosure auction during this moratorium. Mortgage servicers are also prevented from taking foreclosure action during this time period.
You may be wondering who the enterprise-backed 60-day moratorium affects. But wait, what’s an enterprise backed single-family mortgage? It simply means Fannie Mae or Freddie Mac owns your mortgage.
An enterprise, or government-sponsored enterprises, are financial service corporations created by Congress to enhance the flow of credit into the housing market. If your single-family mortgage is owned by either enterprise, you have additional time to make an action plan.
You can find out if your mortgage is owned by Fannie Mae or Freddie Mac at the links below:
What is your first step?
If you are worried about falling behind on your mortgage payment due to loss of income you can call your mortgage servicer to talk through your options. Your servicer is responsible for collecting day-to-day loan payments and managing escrow accounts, but they also have a loss mitigation department that can serve to identify options to help catch up with your payments. You can find the number on your mortgage bill.
What are your options for catching up?
If you’ve been impacted by COVID-19, a forbearance plan may be an option offered by your mortgage servicer to reduce or suspend your mortgage payment for a period of time. After the forbearance has ended, you’ll need to work with your servicer to get caught up on the missed payments. Generally, this is done through a reinstatement where you pay the past due balance in full, a repayment plan to pay your regular payment plus an agreed-upon additional amount until you are caught up, or a loan modification which adds the past due amount into your loan balance. Work closely with your servicer after the forbearance ends to prevent foreclosure.
In a jam? Our “Handy Guide to Housing Counselors” explains how to find free one-on-one advice.