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CARES Act relief measures and other moves by federal agencies have provided some economic help--and the FHA/HUD is no exception, requiring participating lenders to delay initiating or continuing foreclosures during the ongoing emergency.

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FHA Announces Extension of Foreclosure Relief

June 19, 2020

FHA Announces Extension of Foreclosure Relief
Coronavirus containment measures have created economic hardship from many Americans; loss of income creates economic stress that can result in late and missed mortgage payments, putting homeowners at risk of foreclosure.

But during the pandemic, CARES Act relief measures and other moves by federal agencies have provided some economic help--and the FHA/HUD is no exception, requiring participating lenders to delay initiating or continuing foreclosures during the ongoing emergency.

The Department of Housing and Urban Development and the Federal Housing Administration have announced an extension of the foreclosure moratorium announced as part of pandemic relief measures in the U.S.

The press release, titled Extension of Foreclosure and Eviction Moratorium in connection with the Presidentially-Declared COVID-19 National Emergency, announces an extended moratorium on foreclosures and evictions on all FHA loans except for those with properties secured by “vacant or abandoned” buildings.

In March 2020, the Department of Housing and Urban Development issued Mortgagee Letter 2020-04, which announced a 60-day moratorium on foreclosure and eviction for FHA borrowers--the goal was to avoid displacing home owners during the coronavirus pandemic. The original moratorium was extended from May 17, 2020 to June 30, 2020.

But the pandemic has not, at the time of this writing, abated in the United States and many areas (20 states in all) are experiencing rising COVID-19 cases. In response to ongoing concerns over the national emergency, HUD has issued another extension of the moratorium.

The new, extended moratorium expiration date is now August 31, 2020. According to the HUD press release, “The moratorium applies to the initiation of foreclosures and to foreclosures in process” and adds that this action is separate from “any eviction moratorium applicable to lessors provided under the CARES Act, evictions of persons from properties securing FHA-insured Single Family mortgages, excluding actions to evict occupants of legally vacant or abandoned properties,” which are “also suspended through August 31, 2020.”

Borrowers who are in danger of foreclosure on an FHA mortgage should reach out to their loan servicers immediately to see what options exist. The more payments missed, the less flexible your foreclosure avoidance choices get.

The FHA lender may be able to offer a loan modification, loan forbearance, or other relief but these measures are not automatic. Borrowers must work with the lender to get the loan back in good standing.

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