Coronavirus: Foreclosure Relief

The coronavirus (COVID-19) national emergency has put thousands of homeowners into a financial tailspin. If you’re struggling to keep up with your mortgage payments, you most likely have options for keeping your home. In some cases, federal or state law could provide help in the form of a required forbearance or foreclosure moratorium.

Also, many different entities, like banks and mortgage companies, are offering assistance to homeowners who need it.

Foreclosure Moratoriums

A foreclosure moratorium is a temporary halt in the initiation or continuation of foreclosure procedures. Some states, local areas, and entities have imposed a foreclosure moratorium for particular mortgage loans during the coronavirus crisis. Courts, too, in some places, have stopped processing nonessential cases, like foreclosures, temporarily.

If you have a federally backed mortgage loan, like one owned or insured by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or the Department of Agriculture's Rural Housing Service, the following moratoriums are in place:

Foreclosure Relief for Fannie Mae and Freddie Mac loans

Fannie Mae and Freddie Mac have suspended foreclosures and evictions until July 31, 2021. The foreclosure moratorium applies to Fannie- and Freddie-backed, single-family mortgages. The moratorium also applies to evictions for properties that Fannie Mae or Freddie Mac have acquired through foreclosure or deed in lieu of foreclosure transactions.

Check the Fannie Mae loan lookup tool and Freddie Mac loan lookup tool online to find out if either of these entities backs your loan. You can also ask your servicer (often your bank or lender) if Fannie Mae or Freddie Mac owns or guarantees your loan, or call 800-232-6643 (Fannie Mae) or 800-373-3343 (Freddie Mac).

Foreclosure Relief for FHA-Insured, VA-Guaranteed, and USDA Loans

HUD, VA, and USDA extended their existing foreclosure moratoriums for federally backed mortgage loans through July 31, 2021.

Foreclosure Relief for FHA-Insured Loans

FHA-insured single-family mortgages, including FHA-insured reverse mortgages, are subject to the foreclosure and eviction moratorium. Borrowers with FHA-insured reverse mortgages can also ask their lender to delay a foreclosure for six months, sometimes with an additional six-month extension or more available with HUD approval. Vacant or abandoned properties aren’t covered.

To determine if your loan is FHA-insured, check for an FHA case number on your mortgage or deed of trust. In some situations, however, a loan can lose its FHA-insured status. Contact your loan servicer or HUD’s National Servicing Center at 877-622-8525 to verify your loan's status.

Foreclosure Relief for VA-Guaranteed Loans

The foreclosure moratorium applies to properties secured by VA-guaranteed mortgages, including those previously secured by VA-guaranteed loans but currently in VA’s real estate owned (REO) portfolio. The moratorium stops the initiation of foreclosures, the completion of foreclosures in process, and evictions. Vacant or abandoned properties aren’t covered.

To find out if you have a VA-guaranteed loan, look for language in the note and mortgage that identifies it as a VA loan. You can also look in your loan closing documents to see if you paid fees to the VA.

Foreclosure Relief for USDA/Rural Housing Service Loans

USDA's foreclosure and eviction moratorium apply to Single Family Housing Direct Home Loans and Single Family Guaranteed Home Loans. The moratorium stops the initiation of foreclosures, the completion of foreclosures in process, and evictions of homeowners from properties bought with a USDA direct or guaranteed home loan. However, vacant and abandoned properties aren’t included in the moratorium.

If you have a mortgage directly extended by the USDA's Rural Housing Service (RHS), you probably know that you have this kind of loan. If you have a privately serviced RHS-guaranteed loan, however, you might not be aware of your loan’s status. Ask your loan servicer or check your loan closing paperwork.

Other Moratoriums

While some state-specific foreclosure moratoriums have expired, others are ongoing. To get information about whether a foreclosure moratorium is in effect where you live, look online at official government and court websites, talk with a local lawyer, contact a HUD-approved housing counselor, or call your loan servicer.

Getting Help With Your Mortgage Payments

A moratorium won’t keep you out of foreclosure in the long run if you don't make your mortgage payments. So, even if a temporary moratorium covers you, it’s good to learn what options are available to help you with your payments. You might be eligible for a forbearance, like under the federal CARES Act (see below), a loan modification, or another option.

Forbearances for Federally Backed Mortgage Loans and Other Loan Types

Under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, homeowners with federally backed mortgage loans, regardless of delinquency status, experiencing a financial hardship that's due directly or indirectly to COVID-19, can get a forbearance of up to 180 days, which can generally be extended for up to another 180 days. These forbearances, sometimes called "COVID-19 forbearances" are available until September 30, 2021.

HUD, VA, and USDA have announced that borrowers with FHA-insured, VA-guaranteed, and USDA loans can get up to six months of additional mortgage-payment forbearance in three-month increments if they entered a forbearance on or before June 30, 2020. The FHFA announced that borrowers with Fannie Mae- and Freddie Mac-backed loans could extend their forbearances for another three months after the initial 180-day forbearance and 180-day extension expire. To get the forbearance extension, borrowers must have a COVID-19 forbearance plan in place on or before February 28, 2021, and other limits might apply. To get a forbearance, contact your loan servicer.

For FHA-insured loans, if the initial forbearance date is July 1, 2020 to September 30, 2020, you can get a three-month extension after the initial two 180-day periods. If the initial forbearance date is October 1, 2020 to June 30, 2021, you can only get two 180-day forbearance periods. And you can only get a six-month forbearance if your initial request is made between July 1, 2021, and September 30, 2021.

After the forbearance period ends, Fannie Mae, Freddie Mac, FHA, VA, and USDA offer various ways to repay the skipped amounts, like in a lump sum (if you can afford it), through a repayment plan, by completing a loan modification, or with a payment deferral. If your loan is owned or insured by Fannie Mae, Freddie Mac, FHA, VA, or the Rural Housing Service, you can contact that entity too to find out about mortgage relief.

If your loan isn't federally backed, your lender, bank, mortgage company, or servicer might offer a forbearance or another form of relief, like a loan modification. Also, your state might require lenders to provide mortgage help to borrowers. Arizona, California, Connecticut, Massachusetts, New York, Oregon, Rhode Island, and the District of Columbia, for example, require lenders to give forbearances to certain borrowers dealing with financial hardships due to COVID-19.

Applying for Mortgage Payment Help Under Federal Law

Usually, subject to a few exceptions, federal law prevents a foreclosure from starting until you’re over 120 days delinquent on the loan. Also, under federal law, if you send the servicer a complete loss mitigation (foreclosure avoidance) application before foreclosure begins, it can’t start the process unless and until:

• it informs you that you don’t qualify for a foreclosure alternative (and any appeal has been exhausted)
• you decide not to accept whatever loss mitigation offer you get, or
• you don’t abide by the loss mitigation agreement, like if you fail to make timely payments on a trial modification.

If you’re already in foreclosure and you send the servicer a complete application more than 37 days before a foreclosure sale, federal law prohibits the servicer from asking a court for a foreclosure judgment or order of sale, or conducting a foreclosure sale, until one of the three conditions mentioned above has been met. However, federal law doesn't require the servicer to review more than one loss mitigation application unless you bring the loan current after applying.

State Laws or Your Loan Contract Might Provide Foreclosure Protections

State foreclosure laws set out the steps to the foreclosure process in that state. Many states have laws that give homeowners facing foreclosure specific rights and protections.

Getting More Help With Foreclosure

A local foreclosure attorney can tell you about federal laws and any state laws that could protect you in a foreclosure. A HUD-approved housing counselor can give you helpful information (at no cost) about loss mitigation options (ways to avoid a foreclosure).