Per HUD, earlier today, on August 28, 2020, the Federal Housing Administration (FHA) announced the 3rd extension of its foreclosure and eviction moratorium through December 31, 2020, for homeowners with FHA-insured single family mortgages covered under the Coronavirus Relief and Economic Security (CARES) Act.
This extension provides an additional 4 months of housing security to homeowners. With this 3rd extension, the FHA has now provided more than 9 months of foreclosure and eviction relief to FHA-insured homeowners
The FHA’s Single Family foreclosure and eviction moratorium has been in place since March 18, 2020, and continues to apply to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages.
The moratorium requires that mortgage servicers:
1. Halt all new foreclosure actions and suspend all foreclosure actions currently in process for FHA-insured single family properties, excluding legally vacant or abandoned properties; and
2. Cease all evictions of persons from FHA-insured single family properties, excluding actions to evict occupants of legally vacant or abandoned properties.
The HUD press release suggested that homeowners with FHA-insured mortgages should continue to make their mortgage payments during the foreclosure and eviction moratorium if they are able to do so, or seek mortgage payment forbearance pursuant to the CARES Act from their mortgage servicer, if needed.
Pursuant to the CARES Act, the FHA requires mortgage servicers to:
1. Offer borrowers with FHA-insured mortgages delayed mortgage payment forbearance when the borrower requests it, with the option to extend the forbearance for up to a year.
2. The FHA does not require a lump sum payment at the end of the forbearance period.
3. Assess borrowers who receive COVID-19 forbearance for its special COVID-19 National Emergency Stand alone Partial Claim before the end of the forbearance period. The COVID-19 National Emergency Standalone Partial Claim puts all deferred mortgage payment amounts owed into a junior lien which is only repaid when the borrower sells the home, refinances the mortgage, or the mortgage is otherwise extinguished.
Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
If you have any questions about this post, please contact Brad A. Molotsky, Elizabeth Mincer or the attorney in the firm with whom you are regularly in contact.
Be well and stay safe.