President Biden`s plan to help homeowners in foreclosure

What Is Foreclosure?

The legal mechanism by which a lender seeks to recoup the amount owing on a defaulted loan by seizing and selling the mortgaged property is known as foreclosure. The default usually occurs when a borrower fails to make a certain amount of monthly payments, but it may also occur if the borrower fails to fulfill other provisions of the mortgage agreement.

Facts about foreclosure

• Foreclosure is a legal procedure that allows lenders to recoup funds owing on a defaulted loan by seizing and selling the mortgaged house.
• While the foreclosure process differs by state, lenders generally aim to negotiate with borrowers to get them caught up on payments and prevent foreclosure.
• The average number of days it takes to complete a foreclosure is 673, but this varies greatly by state.

Understanding Foreclosure

The legal basis for the foreclosure process is a mortgage or deed of trust arrangement, which grants the lender the right to use a property as collateral if the borrower fails to meet the terms of the loan agreement. The foreclosure process starts when a borrower defaults or misses at least one mortgage payment, but it varies by state. The lender then sends a missing payment note, indicating that the payment for that month has not been paid.

The lender will issue a demand letter if the borrower misses two payments. Although this is a more serious situation than a missing payment note, the lender will be able to work with the borrower to make arrangements to make up the missed payments. After 90 days of missed payments, the lender sends a notice of default. The loan is turned over to the lender’s foreclosure department, and the borrower usually has another 90 days to make up the payments to get the loan reinstated (this is called the reinstatement period). If the homeowner does not make up the unpaid payments by the end of the reinstatement period, the lender will begin foreclosure proceedings.

If you have a federally guaranteed mortgage and are behind on payments due to a COVID-19-related financial hardship, you might be eligible for a payment suspension, which was initially for a period of up to 12 months with no late fees but was recently extended by President Biden’s executive order to March 31, 2021.

As millions of Americans continue to suffer as a result of the COVID-19 pandemic, President Biden is taking steps to help individuals and families stay in their homes. A housing affordability crisis has been caused by the COVID-19 pandemic. Currently, one out of every five tenants is behind on their rent, and just over ten million homeowners are behind on their mortgage payments. People of color face even more difficulties and are more likely to miss or defer payments, placing them at risk of eviction and foreclosure.

The Departments of Housing and Urban Development, Veterans Affairs, and Agriculture announced a coordinated extension and expansion of forbearance and foreclosure relief programs today, as part of the President’s pledge to provide immediate relief for American families bearing the brunt of this crisis. These crucial safeguards were set to expire in March, putting many people at risk of more debt and losing their homes. As we face an unprecedented national emergency, homeowners will now receive much-needed assistance. Such action builds on the President’s Day One actions to expand federally backed mortgage foreclosure moratoriums.

The actions announced will:

• Extend the foreclosure moratorium for homeowners until June 30, 2021;
• Extend the registration window for borrowers who want to seek forbearance until June 30, 2021;
• Include up to six months of additional mortgage payment forbearance, in three-month installments, for borrowers who joined forbearance on or before June 30, 2020.

The Departments of Housing and Urban Development, Veterans Affairs, and Agriculture collaborated to ensure that the above activities reached the largest number of Americans possible. For borrowers approaching the end of their forbearance period, the Federal Housing Finance Agency, the autonomous agency that manages Fannie Mae and Freddie Mac, extended forbearance by three months last week. 70 percent of current single-family home mortgages would be covered by these concerted measures.

As America continues to rebound from a traumatic recession, President Biden is committed to maintaining homeownership and housing affordability. Extending forbearance and foreclosure prevention services are crucial steps toward creating more resilient and inclusive societies.

To further bolster these efforts, Congress must pass the American Rescue Plan, which would provide more assistance to distressed homeowners. The bailout package establishes a Homeowners Assistance Fund, which would provide states with $10 billion to assist distressed homeowners with mortgage and energy payments. This relief is important for homeowners with private-sector mortgages who are unable to benefit from today’s acts and could face longer-term difficulties.

The Biden-Harris Administration’s priorities in extending these protections are to:

1. Assist homeowners in the United States with immediate relief.

   The acts directly help the 2.7 million homeowners currently in COVID forbearance and expand forbearance options for nearly 11 million government-backed mortgages throughout the country. This assistance is needed by both large and small communities. That is why the Departments of Housing and Urban Development, Veterans Affairs, and Agriculture collaborated to provide relief to homeowners in urban, suburban, rural, and military areas, as well as seniors with reverse mortgages.

2. Assist underserved populations of color.

   The health and economic costs of this epidemic have not been distributed equally, as has been the case during the pandemic. Extending forbearance programs would benefit homeowners of color, who account for a disproportionate share of borrowers with unpaid loans and loans in forbearance due to COVID-related hardship. President Biden pledged to advance racial equality in all government services and policies on the first day of his administration. Today, organizations are stepping up to provide housing assistance that will improve communities of color and lay the groundwork for a more inclusive recovery.

3. Provide a single point of contact for housing assistance.

   Consumers and landlords can get up-to-date details on their relief choices, rights, and key deadlines by going to consumerfinance.gov/housing. The Consumer Financial Protection Bureau provides this website as a one-stop-shop for both homeowners and tenants to learn about services and tools that can help them remain in their homes by reducing the possibility of eviction and foreclosure as federal agencies continue to work on housing assistance for American families.