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On March 1, the CFPB released a report, Housing Insecurity and the COVID-19 Pandemic, analyzing the effects of the Covid-19 pandemic on the housing market, particularly with respect to low-income and minority households. According to the Bureau, as of December 2020, more than 11 million households were overdue on their rent or mortgage payments, placing them at heightened risk of losing their homes to foreclosure or eviction as Covid-19 relief programs expire in the upcoming months. Of these households, the Bureau noted that Black and Hispanic households bear a disproportionate financial burden and “were more than twice as likely to report being behind on housing payments than white families.” Additional statistics include: (i) 2.1 million households are more than 90 days behind on their payments; (ii) roughly 263,000 families noted as being “seriously behind” on their mortgages (and not enrolled in forbearance plans) will have limited options to avoid foreclosure once relief programs end; (iii) an estimated 8.8 million tenant households are behind on their rent, with 9 percent of renters reporting that they are likely to be evicted in the next two months; and (iv) of the 2.7 million borrowers noted as being in active forbearance as of January 2021, more than 900,000 of these borrowers will have been in forbearance for more than a year as of April 2021. The Bureau noted most borrowers that have exited forbearance after six or fewer months “have been able to resume payments without any issue.” However, borrowers who have been in forbearance longer are more likely to have difficulties resuming payments.
In a blog post released the same day, acting Director Dave Uejio acknowledged that mortgage servicers and landlords have been working to help keep borrowers and renters in their homes, noting that “[m]ost mortgage servicers are working hard to engage with the record number of homeowners in forbearance and the many other homeowners struggling to make payments.”
On February 25, the FHFA announced that Fannie Mae and Freddie Mac (GSEs) will extend their moratorium on single-family foreclosures and real estate owned (REO) evictions until June 30. The foreclosure moratorium applies only to homeowners with a GSE-backed, single-family mortgage, and the REO eviction moratorium applies only to properties that were acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. Additionally, FHFA announced that borrowers may be eligible for up to a three-month forbearance extension so long as they are on a Covid-19 forbearance plan as of February 28 (details on the Covid-19 forbearance covered by InfoBytes here), and that the Covid-19 payment deferral may now cover up to 18 months of missed payments (previously covering up to 15 months of missed payments, additional details covered by InfoBytes here). The extensions are implemented in Fannie Mae Lender Letter LL-2021-07 and Freddie Mac Guide Bulletin 2021-8.
On February 16, the Biden administration announced an extension of the Covid-19 forbearance and foreclosure protections for homeowners through June 30. According to the White House statement, the administration has directed HUD, Department of Veterans Affairs, and Department of Agriculture to (i) extend the foreclosure moratorium for homeowners through June 30; (ii) extend the mortgage payment forbearance enrollment window until June 30; and (iii) provide up to six months of additional mortgage payment forbearance, in three-month increments. The announcement notes that the extension will “directly benefit the 2.7 million homeowners currently in COVID forbearance and extend the availability of forbearance options for nearly 11 million government-backed mortgages nationwide.” The FHA extensions are reflected in Mortgagee Letter 2021-05 and the VA extensions are reflected in Circulars 26-21-04 and 26-21-05.
As previously covered by InfoBytes, FHFA announced an extension of Fannie Mae and Freddie Mac’s foreclosure moratorium until March 31 and the option for borrowers to receive an additional three-month Covid-19 forbearance extension.
On February 9, the FHFA announced that Fannie Mae and Freddie Mac (GSEs) will extend their moratorium on single-family foreclosures and real estate owned (REO) evictions until at least March 31 (which was set to expire on February 28, previously covered here). The foreclosure moratorium applies to homeowners with a GSE-backed, single-family mortgage only, and the REO eviction moratorium applies to properties that were acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. Additionally, FHFA announced that borrowers may be eligible for up to a three-month forbearance extension so long as they are on a Covid-19 forbearance plan as of February 28 (details on the Covid-19 forbearance covered by InfoBytes here) and the Covid-19 payment deferral may now cover up to 15 months of missed payments (previously covering up to 12 months of missed payments, additional details covered by InfoBytes here).
Additionally, FHFA issued an extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA extended until March 31 existing guidelines related to: (i) alternative appraisal requirements on purchase and rate term refinance loans; (ii) alternative methods for documenting income and verifying employment before loan closing; and (iii) expanding the use of power of attorney to assist with loan closings.
On December 21, FHA announced the extension of several Covid-19-related flexibilities, which were set to expire on December 31. Specifically, FHA further extended its foreclosure and eviction moratorium through February 28. The moratorium applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages, excluding legally vacant or abandoned properties. Additionally, FHA extended the date by which borrowers must engage with their servicer to obtain an initial Covid-19 forbearance to February 28 (details on the Covid-19 forbearance covered by InfoBytes here), and requires that mortgage servicers provide up to 6 months of forbearance or an additional 6 month extension of the initial Covid-19 forbearance. The FHA also extended (i) the timeframe for providing an insurance endorsement on single family mortgages in forbearance through March 31; (ii) the temporary re-verification of employment guidance and exterior-only appraisal inspection option through February 28; and (iii) temporary provisions for verification of self-employment, rental income, and 203(k) Rehabilitation Mortgage escrow accounts through February 28.
HUD issues mortgage letters extending temporary guidance permitting endorsement despite forbearance and guidance on self-employment and rental income
On November 25, HUD issued Mortgage Letters 2020-39 and 2020-40 extending its temporary guidance for endorsement of mortgages where the borrower has been granted a Covid-related forbearance from ML 2020-16 (previously covered here) and for verification of self-employment, rental income, and 203(k) Rehabilitation Escrow Accounts from ML 2020-24 (previously covered here). The guidance is extended through December 31, 2020.
District Court: National bank agrees to obtain customer consent before Covid-19 forbearance placement
On November 2, the U.S. District Court for the Western District of Virginia entered an agreed order resolving a class of homeowners’ motion for preliminary injunction. The national bank defendant voluntarily agreed it will not place mortgages into Covid-19-related forbearance plans unless a customer or their authorized representative has made the request. The agreed order will remain in place until the court enters either a superseding order or a final judgment in the matter. In addition to not activating Covid-19 forbearances without customer permission, the bank has also agreed to stop extending forbearances for any mortgage customers beyond the originally disclosed terms unless an extension has been requested, or a customer or their authorized representative has failed to respond to attempts made by the bank to determine whether the customer would like to extend the forbearance. At issue are allegations made by the plaintiffs that the bank, among other things, “unilaterally” placed their mortgages into CARES Act forbearance without their consent which negatively impacted their credit reports. The agreement notes that nothing in the order prohibits the bank “from delaying or deferring enforcement of any noteholder’s rights and remedies under the applicable mortgage loan documents,” and that, moreover, the agreement does not concede any disputed issue related to the pending preliminary injunction motion or the plaintiffs’ complaint.
On October 20, FHA announced that homeowners experiencing a Covid-19 financial hardship with FHA-insured mortgages can request an initial forbearance or a Home Equity Conversion Mortgage (HECM) extension through December 31. Specifically, Mortgagee Letter 2020-34 extends the date by which mortgagees must approve the initial Covid-19 forbearance or Covid-19 HECM extension originally provided for in ML 2020-06 and expanded in ML 2020-22 (covered by InfoBytes here and here). FHA notes that due to the continued Covid-19 pandemic and its impact on borrowers around the country, the agency is extending the deadline through December 31 from the original deadline of October 30.
On September 30, the HUD, Office of the Inspector General (HUD OIG) issued a follow-up study examining the information on mortgage loan servicers’ websites about the CARES Act loan forbearance provisions. As previously covered by InfoBytes, in April, HUD OIG issued consumer guidance noting that among the top 30 FHA mortgage servicers, information on forbearance options under the CARES Act was found to be incomplete, outdated, inconsistent, or unclear. On August 11, HUD OIG reviewed the “readily available” Covid-19 pandemic information on the websites of the same top 30 FHA mortgage servicers, noting that some of the servicers still provided misleading forbearance information. Among other things, HUD OIG found that certain mortgage servicers (i) did not offer clear information on the length of the initial forbearance period; (ii) did not make it clear that borrowers could qualify for forbearance extensions after the initial 180 day period; and (iii) did not clearly state that forbearance is an option for borrowers.
On September 24, the FHFA announced the extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA has extended until October 31 existing guidelines related to: (i) GSE purchases of qualified single-family mortgages in forbearance that meet specific eligibility criteria; (ii) alternative appraisal requirements on purchase and rate term refinance loans; (iii) alternative methods for documenting income and verifying employment before loan closing; and (iv) expanding the use of power of attorney to assist with loan closings. The extensions are implemented in updates to Fannie Mae Lender Letters LL-2020-03, LL 2020-04, LL-2020-06, and Freddie Mac Guide Bulletin 2020-37.
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