FHA Extends Eviction Moratorium For Foreclosed Loan Borrowers

Real Estate

The Federal Housing Administration (FHA) today announced an extension of its moratorium on evictions for foreclosed borrowers and their occupants through September 30, and noted the expiration of the foreclosure moratorium on July 31, 2021.

The extension is part of President Biden’s announcement on July 29 that federal agencies will use their authority to extend their respective eviction moratoria through the end of September, which will provide continued protection for households living in federally-insured, single-family properties.

FHA’s eviction moratorium extension will avert displacement of foreclosed borrowers and other occupants who need more time to access suitable housing options after foreclosure.

 “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,” said Lopa Kolluri, principal deputy assistant secretary for housing. “We don’t want to see any individuals or families displaced unnecessarily while trying to recover from the pandemic.”

With today’s announcement, mortgage servicers must continue to halt evictions for FHA Single Family Title II forward and home equity conversion mortgage (HECM) foreclosed properties, except for those properties that are legally vacant or abandoned.

An FHA forward mortgage allows a borrower to apply for funds to purchase the home, with options to finance the Upfront Mortgage Insurance Premium and certain approved, appraiser-required corrections where applicable.

Mortgage servicers can initiate or continue foreclosures in accordance with FHA requirements once the single-family foreclosure moratorium expires as planned on July 31, 2021, but may not evict a foreclosed borrower or other occupant.

The FHA urges those who are behind on their mortgage payments or are having difficulty complying with the terms of their reverse mortgage or home equity conversion mortgage, and have not yet contacted their mortgage servicer, to do so immediately.

By contacting their servicer, borrowers can obtain a mortgage payment forbearance or an HECM extension. For FHA forward mortgages, FHA also urges borrowers to engage with their mortgage servicer when their servicer contacts them about the new Covid-19 Advance Loan Modification or how to bring their mortgage current. Under the Covid-19 ALM program, eligible borrowers get a minimum 25% reduction in their monthly mortgage payment’s principal and interest portion.

Borrowers who are seeking more information on the options available to them should also consider contacting a HUD-approved housing counseling agency.

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