The Federal Housing Finance Agency (FHFA) announced on August 27 that Fannie Mae and Freddie Mac (the GSEs) will extend their moratorium on foreclosures and evictions until at least December 31, 2020. The foreclosure moratorium applies to GSE-backed, single-family mortgages only. The evictions moratorium applies to properties that have been acquired by a GSE through foreclosure or deed-in-lieu of foreclosure transactions (real estate owned, or REO, properties). Currently, FHFA projects additional expenses of $1.1 to $1.7 billion will be borne by the GSEs due to the existing foreclosure moratorium and its extensions related to the coronavirus (COVID-19) pandemic.
We had discussed the previous extension of the moratorium, which was set to expire on August 31, in a previous blog post. As we wrote in a LawFlash, due to a standstill in negotiations for a further comprehensive stimulus package, US President Donald Trump recently signed two executive actions that purportedly extend various aid measures for individuals impacted by the coronavirus pandemic. One of these actions was an executive order to provide relief for homeowners and renters. That executive order stated, “In consultation with the Secretary of the Treasury, the Director of FHFA shall review all existing authorities and resources that may be used to prevent evictions and foreclosures for renters and homeowners resulting from hardships caused by COVID-19.” This extension by the FHFA may be either an independent action by the agency or a result of the president’s executive order, or some combination of both.
We will continue to monitor the effect of the pandemic on the mortgage industry and provide updates as developments occur. For more information about what servicers should know about managing COVID-19 mortgage loan forbearances, please see our LawFlash.
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