Residents occupying foreclosed or surrendered homes owned by the Federal Housing Administration (FHA) cannot be evicted when the July 31 foreclosure moratorium expires.
The FHA announced a moratorium extension specific to Real Estate Owned (“REO” or post-foreclosure) eviction until September 30, 2021. The extension applies to single family home mortgages and Home Equity Conversion Mortgages (HECM), but does not cover vacant or abandoned properties.
Mortgage relief options
The foreclosure and forbearance moratoria are still set to expire on July 31, 2021. However, the FHA recently announced additional mortgage relief options including a 25% reduction in principal and interest payments and potential extension of the loan term.
These loan modification options are designed to prevent foreclosure for COVID-19 affected homeowners coming out of forbearance.
Even with these additional loan modification options, some borrowers may not be able to find a repayment plan that is sustainable long-term. In this instance, mortgage servicers may begin foreclosure proceedings as early as August 1, but cannot initiate eviction until after the new deadline expires.
“We must continue to do everything within our authority to make sure that foreclosed borrowers who are impacted by the pandemic have the time and resources to secure safe and stable housing, whether it’s in their current homes, or by obtaining alternative housing options,” said Principal Deputy Assistant Secretary for Housing Lopa P. Kolluri. “We don’t want to see any individuals or families displaced unnecessarily while trying to recover from the pandemic.”
The extension seeks to give homeowners that were unable to avoid foreclosure an additional two months to find stable housing with assistance from federal, state, or local resources, including consultations with HUD-certified housing counselors.
As the effects of the pandemic continue to ripple through the housing market, the FHA eviction moratorium extension may provide a lifeline to homeowners that faced the most severe setbacks.