New regulations related to Covid-19 are putting foreclosures on hold
In normal conditions, you will miss four mortgage payments before the foreclosure process starts, but this depends on a variety of factors, including your lender’s policies and the state of the housing market.
During the coronavirus pandemic, however, the federal government has temporarily covered mortgages insured by the Federal Housing Administration (FHA) or guaranteed by Fannie Mae or Freddie Mac from foreclosure for a period of 60 days.
For FHA-insured mortgages, all new foreclosures will be halted, and existing foreclosures will be postponed, according to new federal guidelines. 2 Due to an executive order signed by President Biden on his first day in office, foreclosures and evictions on Fannie Mae and Freddie Mac-backed mortgages (which account for roughly two-thirds of all mortgages in the United States) have been halted until at least March 31, 2021.
Homeowners who have been financially impacted by the coronavirus outbreak will apply for mortgage forbearance, which allows them to reduce or stop making payments for up to a year. Furthermore, no fines or late fees would be imposed during this period, and lenders will not disclose overdue payments to credit bureaus while under a forbearance agreement.
According to the White House, more than 10 million homeowners in the United States are behind on their mortgage payments, and a wave of foreclosures and evictions could exacerbate the COVID-19 crisis.
The US President Joe Biden extended a federal moratorium on foreclosures and mortgage forbearance programs, providing additional months of help to the more than 10 million homeowners who are behind on payments as the coronavirus pandemic threatens to wreak havoc on the US economy.
The foreclosure moratorium was set to expire at the end of next month, but Biden’s announcement extends it until the end of June. According to the White House, the proposal extends the mortgage forbearance window until June 30 and offers up to six months of extra mortgage payment relief to the 2.7 million Americans who are currently receiving it.
The policies revealed, however, do not protect everybody. The new forbearance policy only extends to Americans with government-backed mortgages, which accounts for about 70% of all existing single-family home mortgages.
Forbearance allows borrowers to put their mortgage payments on hold or decrease them for a period of time, but it does not forgive the debt. When the forbearance period expires, homeowners will also be liable for back payments.
Researchers from Johns Hopkins University, Boston University, Wake Forest University School of Law, the University of California, Los Angeles, and the University of California, San Francisco discovered that lifting eviction moratoriums between mid-March and early September resulted in an estimated 433,700 additional COVID-19 cases and 10,700 additional deaths nationwide.
From March 15 to September 3, the researchers looked at eviction moratoriums and COVID-19 cases in 44 states, including 27 states that lifted their moratoriums during that period. The research is currently undergoing peer review.
Since people who have private-market mortgages aren’t qualified for the relief announced on Tuesday, Biden has introduced a $10 billion Homeowners Assistance Fund as part of his $1.9 trillion stimulus package. Eviction and foreclosure moratoriums, as well as mortgage forbearance programs, will both be extended until September 30 as part of the plan. Renters and small tenants will receive $30 billion in rental and utility assistance.
Biden’s stimulus package is still working its way through committees in Congress, and Democrats have promised to push it through even though Republicans oppose it.
Despite a federal moratorium on evictions during the coronavirus pandemic, tenants have continued to lose their homes, such as this one being confronted by sheriff’s deputies about to carry out an eviction in Los Angeles, California in January. According to the White House, one out of every five tenants is still behind on rent payments, and the next eviction is in progress.
The new crisis, like the Great Recession, has not impacted all homeowners equally. The White House said in announcing the extended foreclosure moratorium and forbearance policies on Tuesday that homeowners of color “make up a disproportionate share of borrowers with unpaid loans and loans in forbearance due to COVID-related hardship.”
Yellen has cited the tremendous effect the COVID-19 epidemic has already had on Americans of color in her support for the Biden administration’s $1.9 trillion initiative and has recommended that more be done “to ensure that this pandemic isn’t another generational setback for racial equality.”
Tenants of color are even more likely to face difficulties: According to the nonpartisan Center on Budget and Policy Priorities, 30% of Black renters, 22% of Asian renters, and 21% of Latino renters are behind on rent payments, compared to just 12% of white renters. Tenants in the United States owe a total of $25 billion in back rent.
Long-standing inequities in the housing system have been compounded by the pandemic. According to Harvard University’s Joint Center for Housing Studies, more than half of Black and Latino people were housing cost-burdened — described as spending more than 30% of their income on housing — even before the crisis, compared to 42% of Asian and white households.
Despite the federal eviction moratorium, tenants have continued to be evicted during the pandemic. Landlords have applied for 245,999 evictions in the five states and 27 cities monitored by Princeton University’s Eviction Lab since the COVID-19 crisis began.
Many distressed homeowners and tenants who could qualify for assistance aren’t getting it because rights and relief aren’t automatically granted and must be applied for, according to the White House. That’s why the Biden administration launched a centralized clearinghouse for housing relief help through the Consumer Financial Protection Bureau on Tuesday.
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