FHA Extends Foreclosure and Eviction Moratorium
FHA's Single Family foreclosure and eviction moratorium extension is effective immediately and applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages. Under these temporary measures, FHA lenders are directed to do the following according to the HUD official site:
- Halt all new foreclosure actions and suspend all foreclosure actions currently in process, excluding legally vacant or abandoned properties; and
- Cease all evictions from FHA-insured Single Family properties, excluding actions to evict occupants of legally vacant or abandoned properties.
The policy update also includes FHA’s temporary policies for exterior-only appraisals for FHA mortgages during the COVID-19 moratorium. There are also provisions to let FHA loan officers use “alternatives for lenders to re-verify a borrower's employment, and for appraisers to conduct desktop or exterior-only appraisals” which also are now allowed to continue through June 30, 2020.
The FHA and HUD press release includes statements by HUD officials acknowledging that American homeowners are in a tough economic spot. "We made it clear at the beginning of this pandemic that no American should have to worry about losing their home amidst a crisis.” said on top HUD official, who added "While we have made great strides in fighting this virus, the fact remains that many Americans are still struggling.”
The new foreclosure moratorium and other measures are extremely important to the some eight million single-family homeowners who purchased or refinanced houses with an FHA mortgage. HUD Deputy Secretary Brian Montgomery was quoted in the press release, saying, “...our highest priority is to ensure that they have the time through the foreclosure moratorium, and the assistance they need through special COVID-19 mortgage forbearance, to remain in their homes long-term."
HUD reminds borrowers with FHA loans that those who can afford to keep making mortgage payments should do so. Otherwise, it’s best to seek mortgage payment forbearance offered via the CARES Act--contact your loan officer to learn more about what mortgage servicers are expected to do for you under the CARES act, but in general, banks must offer borrowers with FHA-insured mortgages up to six months or more of delayed mortgage payment forbearance when the borrower requests it.
FHA also states that it does not require “a lump sum payment at the end of the forbearance period”. Lenders must assess those receiving COVID-19 forbearance for its special COVID-19 National Emergency Standalone Partial Claim before the end of the forbearance period.
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