Due to the impact COVID-19 is having on our citizens, various departments and agencies of the federal government have placed a moratorium on certain foreclosures and evictions initiated on or after March 18, 2020. The end date for the moratorium is either April 30, 2020, or May 17, 2020, depending on the circumstances (see list below). This will have a positive impact on homeowners and tenants, and a negative impact on lenders, asset managers, and landlords. Accordingly, title insurance agents and lenders consider transactions in violation of the moratorium to be void. As a result, title insurance underwriters won’t insure any such transactions.
- For properties secured by FHA-insured Title II Single Family mortgages and Home Equity Conversion (reverse) Mortgages, no foreclosure may be initiated or completed from March 18, 2020, to May 17, 2020. For those that are currently in process, those proceedings are stayed until the deadline is reached. See U.S. Department of Housing and Urban Development Mortgagee Letter 2020-04.
- For loans guaranteed under the U.S. Department of Agriculture (SFHGLP), no foreclosure may be initiated or completed from March 18, 2020, to April 30, 2020. For those that are currently in process, those proceedings are stayed until the deadline is reached. See U.S. Department of Agriculture Bulletin issued March 17, 2020.
- For loans held or guaranteed by Fannie Mae/Freddie Mac, no foreclosure may be initiated or completed from March 18, 2020, to May 17, 2020 UNLESS the property is confirmed to be vacant or abandoned at the time of the foreclosure sale. For those that are currently in process, those proceedings are stayed until the deadline is reached. See Fannie Mae Lender Letter LL-2020-02.
- In addition, the U.S. Department of Veterans Affairs issued Circular 26-20-8 in which it “strongly encourage[d]” loan holders to establish a 60 day moratorium on foreclosures beginning on March 18, 2020.
This obviously covers a large percentage of the loans issued in the United States. Most deeds of trust we see are federally insured, so as a homeowner, look at your mortgage or deed of trust. If it states at the footer of each page that it’s a “Fannie Mae/Freddie Mac” doc, then obviously you’re protected from foreclosure by the moratorium. For many of you, this may be hard to determine. If you’re facing foreclosure or eviction, speak with an attorney, as there are many details to these programs that require application to your specific circumstances. For example, you must apply and qualify for a forbearance plan if your loan is held or guaranteed by Fannie Mae/Freddie Mac. If you’re a tenant, you may find it more difficult to determine whether you’re protected. After all, the person with that information is the landlord that is seeking to evict you. Just make sure to raise the issue in court if things come to that.
In any event, this should not inspire people to stop paying their mortgage or rent! Eventually, the moratorium will be lifted, and delinquent accounts will be subject to foreclosure and eviction as normal. Your specific circumstances will dictate your best course of action, but it’s quite hard to imagine a scenario in which a failure to make payments doesn’t eventually result in disastrous consequences.
Stay safe out there.
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