FHA Extends Eviction Moratorium, But Foreclosures on Schedule to Resume

The Federal Housing Administration (FHA) on Friday announced that it is extending a moratorium on evictions specifically related to foreclosures another 30 days to the end of September, 2021, but that the previously-extended foreclosure-specific moratorium will still expire at the end of July. This is according to the publication of Mortgagee Letter (ML) 2021-19, made available on Friday afternoon.

The move follows an announcement made by President Joe Biden this past Thursday, which pledged that federal agencies will use the breadth of their authority to extend their respective eviction moratoria through the end of September in an effort to provide continued protection for households living in federally-insured, single-family properties.

Foreclosure moratorium still set to expire July 31

The new ML aims to make clear that foreclosure-related evictions will still not be allowed through the end of September, but a previously-instituted moratorium on foreclosures will still be allowed to take place as planned.

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“HUD’s foreclosure moratorium is set to expire on July 31, 2021, and HUD is not extending that moratorium further,” the ML reads in part. “Accordingly, foreclosures of FHA-insured mortgages may be initiated or resumed upon the expiration of the foreclosure moratorium in accordance with FHA requirements.”

The last time that the foreclosure moratorium was extended was in ML 2021-15 published at the end of June, the final time that such a moratorium was extended since first being handed down in ML 2020-04, which was published immediately after then-President Donald Trump announced a moratorium on all foreclosures and evictions at the onset of the COVID-19 pandemic.

Eviction moratorium extended

FHA acknowledges, however, that evictions that result from foreclosures would exacerbate the situations of many people who have been negatively impacted economically by the ongoing pandemic, particularly as a new variant is showing resilience in perpetuating new infections even among those who have been fully vaccinated, according to the Centers for Disease Control and Prevention (CDC).

“To avoid displacement of severely distressed borrowers and allow them time to access suitable housing options after foreclosure, HUD is extending the foreclosure-related eviction moratorium initially announced on March 18, 2020, in ML 2020-04 for persons in properties that were secured by Single Family mortgages, excluding legally vacant or abandoned properties,” the ML reads. “During the moratorium, a Mortgagee must not initiate or continue with an eviction to acquire possession of the foreclosed property.”

The U.S. Department of Housing and Urban Development (HUD) expects that this latest extension will give borrowers the additional time and opportunity they may need to access existing federal, state or local resources to solidify their housing stability, the ML says. Or, those affected can seek out HUD-certified housing counselors to learn more about the options available to them.

The affected programs under this new ML are “all FHA Title II Single Family forward and Home Equity Conversion Mortgage (reverse) mortgage programs except for FHA-insured mortgages secured by vacant or abandoned properties,” the letter reads.

As reported previously by HousingWire mortgage reporter Georgia Kromrei, U.S. Supreme Court Justice Brett Kavanaugh wrote a one-page opinion that restricts President Biden from unilaterally extending a ban on evictions imposed by the Centers for Disease Control and Prevention (CDC). This is what led the White House to appeal to HUD, the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Agriculture (USDA) directly, resulting in this latest guidance from HUD and FHA.

FHA comments

FHA Principal Deputy Assistant Secretary for Housing Lopa P. Kolluri described the importance of action on the part of the federal government’s housing arm to help people avoid becoming displaced from their homes as much as possible.

“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,”Kolluri said in a statement accompanying the ML. “We don’t want to see any individuals or families displaced unnecessarily while trying to recover from the pandemic.”

RMD reached out to FHA for comment on the latest guidance but did not hear back as of press time. As before, FHA urges anyone having trouble keeping up with the responsibilities of either a forward or reverse mortgage to reach out to their loan servicer immediately to determine what relief options may be available to them.

“By contacting their servicer, borrowers can obtain a mortgage payment forbearance or a HECM extension,” the statement says. “For FHA forward mortgages, FHA also urges borrowers to engage with their mortgage servicer when their mortgage servicer contacts them about the new COVID-19 Advance Loan Modification or how to bring their mortgage current. Borrowers who are seeking more information on the options available to them should also consider contacting a HUD-approved housing counseling agency.”

Recent actions taken to ‘protect’ MMI Fund

FHA has also taken additional steps on the forward side to better protect the Mutual Mortgage Insurance (MMI) Fund, which is the same Fund in which the HECM program sits. As reported by fellow HW Media site HousingWire by mortgage reporter Maria Volkova, FHA has introduced a new COVID-19 recovery “waterfall” in ML 2021-18.

“FHA continues to evaluate both the effects of the pandemic on its portfolio as well as the economic indicators of the broader recovery,” the ML said. “While economic indicators are trending positive, FHA has determined that given the nature of COVID-19 hardships homeowners have faced, broader payment relief may be necessary to support a sustained and equitable recovery as well as to protect the Mutual Mortgage Insurance Fund (MMIF).”

Read ML 2021-19 at HUD.

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