In the publication of the first Mortgagee Letter (ML) with relevance to the Home Equity Conversion Mortgage (HECM) program announced during the new Biden administration, the U.S. Department of Housing and Urban Development (HUD) has extended a previously-instituted moratorium on foreclosures and evictions through March 31. This is according to the publication of ML 2021-03 released on Thursday.
“Yesterday, the Biden Administration requested the U.S. Department of Housing and Urban Development and other Federal Agencies to extend its foreclosure and eviction moratorium for single-family mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the Office of Native American Programs’ Section 184 and 184A loan guarantee programs through March 31, 2021,” HUD said in an announcement of the action. “Today, HUD executed one of the first Administration actions to provide meaningful support to the nation’s individuals and families who are struggling to make their mortgage payments due to the financial devastation caused by the COVID-19 pandemic.”
The moratorium, first instituted nearly a year ago by the Trump Administration and most recently extended to the end of February by the previous administration, prohibits servicers from initiating or proceeding with foreclosure and foreclosure-related eviction actions for HUD-insured or guaranteed single-family forward and reverse mortgages. The only exception is for arrangements secured by legally vacant and abandoned properties.
HUD also requires mortgage servicers to provide up to six months of forbearance when a borrower experiencing a financial hardship due to the ongoing effects of the pandemic requests such assistance. An additional six months of forbearance for a borrower who requests an extension is also available.
The ML applies to FHA forward mortgage programs as well as the HECM program, the ML details.
“As President Biden promised, his new Administration is quickly addressing the widespread needs of a nation that is in urgent need of meaningful assistance to begin combatting the effects of COVID-19,” said Acting FHA Commissioner Janet Golrick. “Immediately safeguarding borrowers with HUD-insured or guaranteed mortgages is an important first step in tackling larger, systemic housing challenges that must be overcome.”
This marks the fourth time that the moratorium on foreclosures and evictions has been extended by HUD, based on the publication of three previous MLs all issued in 2020.
“HUD encourages borrowers with HUD-insured or guaranteed mortgages who can make their mortgage payments to continue to do so,” the Department said in its announcement of the extension. “Those who are struggling financially because of COVID-19 should engage with their mortgage servicer – the entity to which they make their monthly mortgage payments. HUD provides post-COVID-19 forbearance loss mitigation options to assist borrowers with bringing their mortgage current.”
Read Mortgagee Letter 2021-03 at HUD.