Feds Take Some Action to Suspend Foreclosures, Evictions

Regulation | March 24, 2020 | by Linda Couch

The economic distress caused by the coronavirus threatens the housing security of millions of Americans. LeadingAge’s mantra that housing is health care has gained overnight converts. Stable housing is healthcare, and it’s also key to a stable workforce.

The economic distress caused by the coronavirus threatens the housing security of millions of Americans. LeadingAge’s mantra that housing is health care has gained overnight converts. Stable housing is healthcare, and it’s also key to a stable workforce.

HUD and other federal housing regulators have begun to take steps to protect some homeowners and some renters from foreclosure and eviction.

On March 18, HUD announced it would suspend foreclosures and evictions of homeowners with mortgages insured by the Federal Housing Administration. This HUD guidance applies to homeowners with FHA-insured Single Family and Home Equity Conversion (reverse) mortgages, and directs mortgage servicers to:

  • Suspend the initiation of foreclosures
  • Suspend the completion of foreclosures in process, and
  • Cease all evictions of persons from FHA-insured single-family properties for 60 days.

The FHA’s actions apply to 8.1 million homes.

On the same day, March 18, the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, announced that those two enterprises would stop foreclosures and evictions of homeowners. For Fannie and Freddie-backed single family owners, this means payment forbearance for borrowers who can demonstrate financial hardship from the spread of the coronavirus. Such forbearance could allow monthly mortgage payments to be suspended for as long as a year.

These two actions from HUD and Fannie/Freddie provide mortgage relief for about 75% of the nation’s single family homeowners with mortgages.

Single family mortgage borrowers are urged to contact their mortgage servicers as soon as possible to discuss their situations and options. Even if they are not an FHA borrower or have their mortgaged backed by Fannie or Freddie, the federal government is urging all lenders to follow suit and provide relief.

On March 23, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will grant mortgage forbearance to owners of multifamily properties in exchange for suspending evictions. The move applies to all Fannie- and Freddie-backed mortgages in situations where renters can’t afford to make their monthly payments due to the outbreak. As part of the forbearance plan, multifamily borrowers must agree to suspend evictions of tenants who are facing financial hardship due to the current crisis.

While the move provides a measure of relief to building owners across the country, it will only protect renters from evictions if their landlord asks for the forbearance.

HUD officials have made public they are also urging Congress to protect HUD-assisted households. The very next or a subsequent emergency package from Congress is expected to dramatically expand foreclosure and eviction suspensions caused by the coronavirus for both HUD assisted and market rate owners and renters.

Meanwhile, many state and local governments have already imposed eviction bans.

The bottom line is, many of employee housing situations could benefit from these government actions, and many more could see their housing stabilized regardless of their economic situations very, very soon.