The initial wave of national lockdowns that began more than six months ago kicked off an extended period of unease for millions of homeowners. The effects of the COVID-19 pandemic have still not been fully realized, and as a result, several agencies responsible for federally-backed loans have recently updated their moratorium guidelines for foreclosures and foreclosure-related evictions. Mortgage servicers of clients with Fannie Mae, Freddie Mac, HUD, FHA, USDA, or VA loans must now carefully review the newly-revised guidelines presented by each agency, as the moratorium period is extended through December 31, 2020.
Each of the agencies mentioned above released individual lender letters and bulletins during the final days of this past August. While each feature individual differences, there are some similarities across each agency. All of the revised guidelines extend the period to which their moratoriums apply through the end of 2020. All also exclude vacant or abandoned properties. Overall, the extension provides necessary relief for many American families—in Fannie Mae and Freddie Mac’s case, the update helps protect 28 million homeowners.
While there is a general correlation among the guidelines, loan servicers are responsible for reading each individual lender letter, as some prevent the advancement of processes, while others bar specific actions when it comes to initiating, moving for, and executing foreclosure judgements or sales. For example, Freddie Mac’s guidelines appear more broad than Fannie Mae’s. Should a servicer decide to move forward with initiating, advancing, or completing either a judicial or non-judicial foreclosure action on a federally-backed loan prior to carefully reviewing these latest bulletins, they may find themselves in violation of the moratorium, and potentially facing legal consequences.
While these recently-released guidelines apply only to federally-backed loans, servicers of non-federally-backed mortgages must be aware of the various state and local orders, regulations, and moratoriums on foreclosures and evictions. These vary by locality, and courts at all levels are barring the prosecution of judicial foreclosure actions at this time. There are a number of state bills also pending which will have an effect on extending moratoriums for home loans of all types.
Because of the nuanced and quickly-changing nature of COVID-19-related foreclosure and eviction moratoriums, both loan servicers and homeowners are in need of experienced and detail-oriented legal counsel. Homeowners may be facing illegal foreclosure actions, while servicers may be missing out on sorely needed income. If you have questions about the latest moratorium guidelines, contact the legal team at Graham Legal today, for a free consultation