Foreclosures and evictions to cease across the US for 60 days

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Published Date 3/23/2020

It’s hard to find anything that isn’t affected by the pandemic these days. Many people whose incomes are compromised because of an interruption of income also own homes, and no one wants to see a repeat of the foreclosure fiasco experienced little more than a decade ago. For that reason, the White House ordered foreclosures and evictions to cease for 60 days across the U.S.

Officials urged struggling homeowners to contact their loan services about forbearance on loans. BankRate’s Natalie Campisi reports that Ally Bank announced its 120-day mortgage payment moratorium, and Bank of America said it would suspend mortgage payments for eligible borrowers. And the Federal Housing Finance Agency (FHFA), Housing and Urban Development (HUD), United States Department of Agriculture (USDA), Fannie Mae and Freddie Mac all have announced a freeze on foreclosures and evictions for at least 60 days as well as forbearance or disaster relief options for homeowners who can’t afford their mortgage payments.

The two agencies that back about half of all mortgages in the US (Freddie Mac and Fannie Mae) have also said they would allow forbearance options to borrowers affected by the pandemic. “Forbearance means your mortgage payments can be suspended for up to 12 months because of economic hardship that was caused by the coronavirus outbreak,” says Campisi. “If this were a typical economic downturn, there would be a daisy-chain reaction that would lead to evictions, landlords collecting less rent, lenders losing money, and foreclosures. But with officials working in concert on a plan that makes sense for everyone, this kind of chain reaction can be avoided.”

She goes on to say that part of the reason the swift action is possible is that lenders are using existing programs as stopgap solutions, such as disaster relief. But they’re also working on a more streamlined assistance program that would help borrowers as long as COVID-19 is disrupting business and ending paychecks for millions of Americans.

In the meantime, homeowners and buyers alike should not be discouraged from borrowing to refinance or to purchase, especially in the face of such historically low rates. Ed DeMarco, president of the Housing Policy Council and the former head of the FHFA, says, “It is critical that we continue to process new mortgage applications, including refinances, in the face of the low-rate environment,” DeMarco says. “That itself is an economic stimulus.”

Source: TBWS

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