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Avoiding Foreclosure During the COVID-19 Pandemic

Avoiding Foreclosure During the COVID-19 Pandemic

A lot of business activities halted as a result of the coronavirus pandemic, and millions of people are out of work for the foreseeable future, with the likelihood of more people joining in. Over 33 million new unemployment claims were filed and with the job losses on the high scale, recovery will be very slow irrespective of the federal stimulus. So, how will those that have lost their source of income be able to keep a roof over their heads? Many people will fall behind on their mortgage and rent payments, and this will result in a looming foreclosure predicament. In this article, we will discuss how renters and homeowners can protect themselves and avoid foreclosures during this pandemic.

Federal Mortgage Relief

The CARES Act

Over 3 million households are already on forbearance plans and more are expected to join as monthly payments become due. The federal CARES Act enables individuals with federally backed mortgage loans that are experiencing financial problems because of coronavirus to request for a forbearance period from their mortgage servicer. Some of the federally backed mortgages include Fannie Mae, Freddie Mac, FHA, USDA, and VA.

Affected borrowers can defer their mortgage payments for up to 180 days under the CARES Act. Plus, borrowers can apply for another 180 days of forbearance with no risks of fees or penalties added to the account. It is essential that borrowers contact their loan servicers for the initiation of this forbearance.

The Department of Housing and Urban Development Suspended Foreclosures and Evictions

President Trump ordered the department on March 18 to suspend all foreclosures and evictions for the succeeding 60 days. This rule applies to homeowners with Federal Housing Administration insured mortgages. This order stops new foreclosures and suspends all current foreclosure actions in the process.

Fannie Mae and Freddie Mac

A large percentage of U.S. home mortgages are backed or owned by Fannie Mae or Freddie Mac. The Federal Housing Finance Agency which oversees these mortgages is providing payment forbearance to borrowers affected by the pandemic for up to 12 months. Also, late fees and penalties are being waived and no forbearance delinquency will be reported to credit bureaus.

Freddie Mac has implemented a relief program for multifamily landlords with mortgages financed with a Freddie Mac multifamily performing loan. Landlords can defer loan payments for up to 90 days by proving COVID-19 hardship – and in turn, they are required not to evict any tenant on the basis of rent nonpayment during this period.

Temporary Suspension on Evictions

The CARES Act protects people living in public housing by providing a temporary suspension on evictions and late fees for nonpayment of rent for 120 days starting from March 27, 2020. Landlords are not allowed to issue an eviction notice until after the temporary suspension period. Also, they will not be allowed to evict a tenant until after 30 days of giving them the notice.

Wrapping Up

Both the federal and state government are putting relief programs in place to protect renters and homeowners from foreclosure during this period. It is essential that you check the website of your mortgage loan servicer to find out the extent they can help you.

If you are facing foreclosure this year regardless of the reason, you need the help of a licensed and experienced attorney in South Florida.  The South Florida Debt Relief and Education Foundation is here to help.  Contact us today for a free consultation.

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