Home Foreclosures And Evictions Banned Through Summer

Home Foreclosures And Evictions Banned Through Summer

The Federal Housing Finance Agency (FHFA) this week announced that it would extend its ban on foreclosures and evictions until at least Aug. 31. This is the second time the FHFA has lengthened its moratorium, which it adopted in the wake of the COVID-19 pandemic. The move has the potential to impact millions of homeowners.

The FHFA oversees government-sponsored enterprises Fannie Mae and Freddie Mac, as well as the 11 Federal Home Loan Banks. Together, these entities provide more than $6.4 trillion in aggregate funding for U.S. mortgage markets and financial institutions.

“During this national health emergency no one should worry about losing their home,” FHFA Director Mark Calabria said in a statement. The foreclosure moratorium applies only to enterprise-backed, single-family mortgages, which make up about 70% of home loans nationwide. 

The Federal Housing Administration similarly said it would extend a moratorium through August for homeowners with FHA-insured single-family mortgages.

The foreclosure moratorium had been set to expire at the end of June.
The foreclosure moratorium had been set to expire at the end of June.

Jobless Rate Remains Elevated

The announcements come amid a period of increased joblessness in the United States, with more than 46 million Americans filing for unemployment insurance in the past 13 weeks.

Though new jobless claims have been slowing, with new claims decreasing for the past 11 consecutive weeks, the unemployment rate is still over 16% nationally, with some states facing unemployment rates in excess of 20%.

Despite recent efforts to help Americans stave off eviction or foreclosure, millions remain unaware of relief programs created to help renters and mortgage holders. Data from a recent Fannie Mae survey indicated that 69% of respondents were unaware of steps taken in response to the coronavirus pandemic to temporarily halt foreclosures and evictions. More than 60% of mortgage holders were unaware of whether their lender offered deferral programs.

Foreclosure Filings at Lowest Rate in at Least a Decade

So far, the U.S. has been able to avoid a wave of foreclosures in response to the coronavirus. In April, real estate data firm ATTOM Data reported there were 156,253 U.S. properties with a foreclosure filing during the first quarter of 2020. While this total represented a 42% increase over the previous quarter, it was 3% lower than the first quarter of 2019. 

New data from ATTOM released earlier this month also shows that the moratorium on evictions and foreclosures may be having the intended effect. The company’s May 2020 U.S. Foreclosure Market activity analysis showed there were 8,767 U.S. properties with foreclosure filings—default notices, scheduled auctions or bank repossessions. This represented the lowest number of total foreclosure filings recorded since the firm began tracking foreclosure data in April 2005.

“The foreclosures industry in the United States remains on hold right now, mainly because of the moratorium imposed by Congress on lenders pursuing delinquent homeowners who have federally backed mortgages,” Ohan Antebian, general manager of online real estate marketplace RealtyTrac, told ATTOM Data. “The temporary ban … has helped drive down the number of foreclosure cases to historically low levels and forced lenders to sit tight.” 

“When (the moratorium) is lifted, lenders will be able to decide how fast to pursue these cases, which will have a ripple on all the ancillary activity connected to foreclosures,” Antebian said. “That will likely mean a surge of work for real estate lawyers, process servers, courts and others. But for now, the industry is running in place.”

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