New Rules and Regulations Issued to Protect Against Foreclosure and Eviction

The impact of the Covid-19 pandemic has detrimentally impacted property owners and renters alike.  Over the past week, however, the agencies and entities which oversee the mortgage markets in the United States have enacted new rules and regulations in an attempt to protect individuals and companies from mortgage foreclosure or eviction.

Fannie Mae and Freddie Mac Offers Forbearance Programs

On March 18, 2020, mortgage buyers, Fannie Mae and Freddie Mac, announced that they will suspend mortgage foreclosure and evictions against their borrowers who own single-family properties.

Under Fannie Mae’s guidelines:

  • Homeowners who are adversely impacted by this national emergency may request mortgage assistance by contacting their mortgage servicer.
  • Foreclosure sales and evictions of borrowers are suspended for 60 days.
  • Homeowners impacted by this national emergency are eligible for a forbearance plan to reduce or suspend their mortgage payments for up to 12 months.
  • Credit bureau reporting is suspended of past due payments of borrowers in a forbearance plan as a result of hardships attributable to this national emergency.
  • Homeowners in a forbearance plan will not incur late fees.
  • After forbearance, a servicer must work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification.

Freddie Mac’s mortgage relief options for borrowers of single-family properties negatively impacted by Covid-19 include:

  • Ensuring payment relief by providing borrowers forbearance for up to 12 months.
  • Waiving assessments of penalties or late fees against borrowers.
  • Suspending the reporting to credit bureaus of delinquencies related to forbearance, repayment or trial plans.
  • Allowing mortgage servicers to offer borrowers additional loss mitigation options that are typically only enacted to address natural disasters, which includes loan modifications that give mortgage servicers options to provide payment relief or keep the payment the same post the forbearance period.

Similar to the guidelines issued by Fannie Mae, Freddie Mac stated that the relief options apply whether or not the mortgaged property is being used as their borrower’s principal residence, second-home, or investment property.

On March 23, 2020, Fannie Mae and Freddie expanded the scope of their respective mortgage forbearance programs to multifamily properties.

In doing so, Fannie Mae and Freddie Mac will offer mortgage forbearance to their multifamily property owners on the condition that they suspend all evictions for renters who cannot pay their rent due to the impact of Covid-19.

Under these newly issued guidelines, Fannie Mae and Freddie Mac lenders will be able to grant forbearance for up to 90 days to such multifamily property owners.

HUD Provides Foreclosure and Eviction Protections

In addition, on March 18, 2020, the U.S. Department of Housing and Urban Development (HUD) similarly suspended foreclosures and evictions for mortgages insured by the Federal Housing Administration (FHA).

The guidelines issued by HUD applies to homeowners with FHA-insured single-family and reverse mortgages and directs mortgage servicers to:

  • Suspend the initiation of foreclosures,
  • Suspend the completion of foreclosures in process, and
  • Cease all evictions of persons from FHA-insured single-family properties for 60 days.

If you have any questions about these newly enacted mortgage forbearance programs, please feel free to contact us at contact@nochumson.com and an attorney at Nochumson P.C. will immediately reach out to you to schedule a free consultation.

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