Real Estate Marketing & Beyond
Homeowners who have an FHA-insured mortgage and are facing financial hardship due to the COVID-19 pandemic have been given an extension until Dec. 31 to submit an initial request for forbearance.
The US. Department of Housing and Urban Development said last week it has decided to extend a deadline that was originally set to expire on October 30, for those that need to make an initial request to their lender.
The change puts the FHA’s forbearance action in line with its recently extended foreclosure moratorium, which now expires at the end of the year.
“By providing this important extension, FHA seeks to assist those struggling with the continued financial effects of the COVID-19 pandemic,” said Dana Wade, HUD assistant secretary for housing and federal housing commissioner, in a statement. “Our goal is to make sure that no homeowner loses their home unnecessarily as a result of this pandemic.”
The FHA requires that lenders provide up to six months of COVID-19 forbearance to any lender that requests it. An additional six months of forbearance is allowed for those who require an extension to that initial six month period.
The move was likely made to help an estimated 400,000 U.S. homeowners who are said to be needlessly delinquent on their mortgages, according to an Urban Institute study published earlier this month. Those homeowners are eligible for forbearance but for whatever reason, have decided not to take it so far. The report said this means there are a large number of homeowners who could face losing their homes when they don’t need to take that risk.
The HUD stressed in its update that homeowners who take forbearance can still make mortgage payments if they’re able to continue doing so. It merely provides a grace period for those who can’t, it explained.
“For those who are struggling right now, we urge them to engage with their servicer immediately,” Joe Gormley, the HUD’s deputy assistant secretary for single-family housing said. “And if your servicer contacts you, it is crucial that you respond to them to let them know if you need assistance. The last thing FHA wants is for any homeowner to risk losing their homeownership investment if they are eligible for assistance.”
There is relief on the way for renters too, thanks to the Centers for Disease Control and Prevention, which recently used its authority to place a moratorium on rental evictions to prevent landlords from evicting certain renters nationwide in the name of public health. The National Association of Realtors and other bodies are urging the Trump administration to approve rental assistance so the moratorium doesn’t lead to a bigger housing crisis, in which housing providers face delinquency and tenants are crippled by ever-increasing back payments on their rental homes.
