By Financial Services Industry Group
On February 16, 2021, President Biden took three actions that affected the current standing rules regarding a lender’s rights and obligations with respect to residential mortgage loan borrowers during the global COVID-19 pandemic.
First, President Biden extended the existing foreclosure and eviction moratorium, which was set to expire on March 31, 2021. This action preserves the existing Department of Housing and Urban Development ban on foreclosure and eviction proceedings for federally backed mortgage loans until at least June 30, 2021.
Second, President Biden extended the deadline for borrowers to request forbearance from their lenders. The existing Federal Housing Administration’s forbearance rule allows borrowers facing financial hardship because of the global COVID-19 pandemic to request a temporary pause or reduction in their mortgage payments for up to six months initially, with an additional six months available if necessary. The deadline to request such forbearance has now been extended to June 30, 2021.
Third, President Biden allowed borrowers who are already enrolled in forbearance under the existing rules to obtain an additional six months of forbearance from their lender, in three-month increments. Borrowers who requested forbearance from their lender on or before June 30, 2020, are eligible for two additional three-month extensions after the twelve months of existing forbearance have expired.
However, the forgoing presidential actions only address the federal moratorium and forbearance as applied to homeowners. The Center for Disease Control’s moratorium on rental evictions based on nonpayment of rent remains set to expire on March 31, 2021. This may change, as the Biden administration has reportedly been in meetings to assess its next steps regarding rental eviction policy.
The American Rescue Plan may provide additional resources to help certain borrowers make their mortgage payments. The proposed plan would create a Homeowners Assistance Fund for the purpose of providing states with $10 billion to help struggling homeowners catch up on their mortgage payments and utility costs. The Homeowners Assistance Fund is specifically aimed at borrowers with private mortgages who cannot take advantage of the current federal foreclosure and forbearance rules.
The foregoing is a brief summary of recent presidential actions regarding the existing lending rules during the global COVID-19 pandemic. If you have any questions about how these rules apply to you, please feel free to contact Jared Anderson or another member of the Financial Services Practice Group.
On February 16, 2021, President Biden took three actions that affected the current standing rules regarding a lender’s rights and obligations with respect to residential mortgage loan borrowers during the global COVID-19 pandemic.
First, President Biden extended the existing foreclosure and eviction moratorium, which was set to expire on March 31, 2021. This action preserves the existing Department of Housing and Urban Development ban on foreclosure and eviction proceedings for federally backed mortgage loans until at least June 30, 2021.
Second, President Biden extended the deadline for borrowers to request forbearance from their lenders. The existing Federal Housing Administration’s forbearance rule allows borrowers facing financial hardship because of the global COVID-19 pandemic to request a temporary pause or reduction in their mortgage payments for up to six months initially, with an additional six months available if necessary. The deadline to request such forbearance has now been extended to June 30, 2021.
Third, President Biden allowed borrowers who are already enrolled in forbearance under the existing rules to obtain an additional six months of forbearance from their lender, in three-month increments. Borrowers who requested forbearance from their lender on or before June 30, 2020, are eligible for two additional three-month extensions after the twelve months of existing forbearance have expired.
However, the forgoing presidential actions only address the federal moratorium and forbearance as applied to homeowners. The Center for Disease Control’s moratorium on rental evictions based on nonpayment of rent remains set to expire on March 31, 2021. This may change, as the Biden administration has reportedly been in meetings to assess its next steps regarding rental eviction policy.
The American Rescue Plan may provide additional resources to help certain borrowers make their mortgage payments. The proposed plan would create a Homeowners Assistance Fund for the purpose of providing states with $10 billion to help struggling homeowners catch up on their mortgage payments and utility costs. The Homeowners Assistance Fund is specifically aimed at borrowers with private mortgages who cannot take advantage of the current federal foreclosure and forbearance rules.
The foregoing is a brief summary of recent presidential actions regarding the existing lending rules during the global COVID-19 pandemic. If you have any questions about how these rules apply to you, please feel free to contact Jared Anderson or another member of the Financial Services Practice Group