FHFA announces further extension of COVID-related mortgage relief

The Federal Housing Finance Agency is providing an additional three months of forbearance to borrowers with loans backed by Fannie Mae and Freddie Mac, totaling 18 months of relief due to the coronavirus pandemic.

The FHFA said Thursday that it was aligning its policies with the Biden administration to address economic burdens for homeowners due to COVID-19. The change comes nearly three weeks after the agency extended the total forbearance period to 15 months.

When Congress passed the Coronavirus Aid, Relief and Economic Security Act last year, it allowed borrowers with federally backed mortgages to request up to 12 months of forbearance — divided into two 180-day increments — if they experienced financial hardship.

In forbearance, a borrower is allowed to suspend payments by extending the loan’s terms. There is no set cutoff date for the 18-month forbearance period because borrowers have entered and exited forbearance at different times.

“Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government,” FHFA Director Mark Calabria said.

“Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government,” FHFA Director Mark Calabria said.

Bloomberg News

The FHFA also said Thursday that it was extending a moratorium on foreclosures and real estate-owned evictions until June 30 for loans backed by Fannie and Freddie. Because housing prices have jumped dramatically, borrowers are more likely to be able to sell their homes than go into foreclosure than in financial crisis in 2008, when many were underwater on their mortgages.

The foreclosure moratorium had been set to expire on March 31, but the FHFA is offering another three-month extension only for single-family mortgages backed by the government-sponsored enterprises. The REO eviction moratorium applies to properties acquired by the GSEs through foreclosures or deed-in-lieu transactions.

Earlier this month, the Biden administration announced similar extensions of relief for loans backed by the Federal Housing Administration, Department of Veterans Affairs and Department of Agriculture.

“Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government,” FHFA Director Mark Calabria said in a press release. “Borrowers and the housing finance market alike can benefit during the pandemic from the consistent treatment of mortgages regardless of who owns or backs them.”

Roughly 2.6 million homeowners were in forbearance plans as of Feb. 14, representing 5.29% of loans serviced, the Mortgage Bankers Association said Monday.

The share of Fannie- and Freddie-backed loans in forbearance fell slightly to 2.97% last week, from 3.01% on Feb. 8, the MBA said. By comparison, 5.22% of all loans serviced are currently in forbearance plans, the MBA said.

Source: nationalmortgagenews.com

Borrowers With Fannie Mae, Freddie Mac Mortgages Can Receive Up to 18 Months of Forbearance, Regulator Says

The Federal Housing Finance Agency will allow homeowners to receive an additional three months of forbearance as it extends the COVID-19 relief options available.

The agency announced Thursday that homeowners with loans backed by Fannie Mae and Freddie Mac  can receive up to 18 months of payment relief. To be eligible for the extended forbearance, homeowners must already be signed up for a forbearance plan by the end of February.

The FHFA also amended its separate payment deferral option for homeowners so they can now miss up to 18 months of payments. Those missed payments can be repaid when the mortgage reaches maturity, when the home is sold or when the mortgage is refinanced.

Originally, Fannie Mae and Freddie Mac instructed loan servicers that mortgage borrowers could request up to 12 months of forbearance on their mortgages as a result of the coronavirus pandemic. But earlier this month, the FHFA extended the forbearance period by an additional three months, for up to 15 months’ forbearance.

The new changes announced Thursday were made to bring the agency’s policies in line with the policies set forth by the Biden administration for loans backed by the federal government, including Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) mortgages.

Beyond extending forbearance, the FHFA also announced that it was extending its moratoriums on single-family foreclosures and real estate owned (REO) evictions until June 30. The moratoriums were previously set to expire at the end of March.

Source: realtor.com

FHFA extends forbearance period to 18 months

Borrowers with mortgages backed by Fannie Mae and Freddie Mac may be eligible for an additional forbearance extension of up to six months, the Federal Housing Finance Agency announced Thursday.

On Feb. 9, the FHFA extended forbearance plans an additional three months past beyond their initial 12 month expiration. With the latest edict, the agency is now allowing borrowers up to 18 months of coverage.

According to the FHFA, eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of Feb. 28, 2021. The FHFA said other limits may apply to the extension but did not provide further details.

With the new extension set in motion, some borrowers may now be in forbearance through Aug. 31, 2022.

The FHFA extended its multifamily forbearance policies in December, pushing forbearance options for multifamily mortgages backed by the GSEs to March 31, 2021, though the agency has yet to say whether the latest extension will also be offered to owners of multifamily properties.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.

Presented by: FICS

Alongside its forbearance announcement, the FHFA also said the GSEs will be extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions through June 30, 2021 – three months past the previous deadline set for Mar. 31, 2021. The new date matches the moratorium set by HUD for FHA and USDA loans.

According to FHFA director Mark Calabria, borrowers and the capital markets investors both benefit from consistent treatment.

“From the start of the pandemic, FHFA has worked to keep families safe and in their home, while ensuring the mortgage market functions as efficiently as possible,” Calabria said in a statement Thursday. “Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government.”

As of Feb. 22, the Mortgage Bankers Association estimates 2.6 million homeowners are in some form of forbearance. The MBA reported on Monday that the portfolios of Fannie Mae and Freddie Mac dipped down to 2.97%. The GSEs have consistently had lower forbearance rates than other owners of mortgages during the pandemic.

Economic data is starting to show some of the effects of long-term moratoriums. Black Knight’s December mortgage monitor report revealed that foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums protected homeowners.

According to Black Knight, recent forbearance and foreclosure moratorium extensions have reduced near-term risk, but at the same time may have the effect of extending the length of the recovery period.

Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021, when the first wave of plans reaches their 12-month expirations.

Source: housingwire.com

Mortgage delinquencies below 6% for first time since March

For the first time since March 2020, the national mortgage delinquency rate fell below 6% to 5.9% in January, according to data from Black Knight on Wednesday.

At the current rate of improvement, the data giant estimates 2.1 million borrowers remain 90 or more days past due though are not yet in foreclosure. While modest mortgage delinquency improvements have occurred for several months, loans considered seriously delinquent are still five times that of pre-pandemic levels.

Thanks to widespread moratoriums, borrowers have managed to avoid eviction and foreclosures for some time now. Foreclosure starts and sales activity managed historic lows in January with starts down 86% year-over-year and sales down more than 95%.

The FHFA most recently extended COVID-19 foreclosure and forbearance moratoriums to March 31, 2021 and the Department of Housing and Urban Development‘s also kicked the foreclosure can further down the road for FHA and USDA loans to June 30, 2021.

While those extensions have reduced short-term foreclosure risk, they are also serving to extend the recovery timeline, Black Knight said. But even with these continuous extensions, Black Knight estimates 1.8 million mortgages will still be seriously delinquent at the end of June when those moratoriums are slated to lift.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.

Presented by: FICS

While servicers gear up to handle the million-plus borrowers that will feed through the mortgage delinquency pipeline, recent research from the Urban Institute estimates that a looming foreclosure crisis isn’t actually on the horizon.

A bevy of loss mitigation waterfalls from both the FHA and FHFA allows borrowers not in forbearance programs eligibility for loss mitigation options, including mortgage modifications. Still, not every borrower will qualify for a modification, and some will be forced to downsize or rent, the Urban Institute noted.

Borrowers also have the most equity available to them in history, and those with ample home equity could exit their home, if they needed to, with their credit intact and potentially some cash in hand.

However, approximately 626,000 of the 3.2 million delinquent borrowers have government loans in Ginnie Mae securities. Because of their high loan-to-value ratios at origination, these borrowers are likely to have less home equity.

“Our analysis shows that, even among delinquent borrowers, less than 1 percent have negative equity and 5.5 percent have near-negative equity. For comparison, in the aftermath of the Great Recession,  approximately 30 percent of homes were in negative or near-negative equity, but the number is now 3.6 percent,” Urban Institute report said.

Source: housingwire.com

HUD issues relief on foreclosures for Texans after storm

Texas residents and businesses have two extra months to file and pay their federal taxes, and Texans will also get some housing-related assistance after severe winter storms this month left millions without power and running water.

The U.S. Department of Housing and Urban Development announced a 90-day moratorium on foreclosures of Federal Housing Administration (FHA)-insured home mortgages. The HUD said that it will extend mortgage insurance to homeowners whose properties have been destroyed. The mortgage insurance expansion can be used to purchase a new home or renovate a damaged one.

The Internal Revenue Service also said on Monday that Texans have until June 15 to file federal returns and pay any taxes owed, tapping its authority to delay deadlines for disaster victims. Any tax forms due in the lead up to the June 15 deadline will be delayed until the new deadline.

Winter storms and record-breaking freezing temperatures hit nearly the entirety of Texas earlier this month. Millions lost power, and then water, as pipes froze and water pressure dropped. Power began resuming late last week and over the weekend, though millions are still without safe drinking water.

Source: nationalmortgagenews.com

Prevention Measures and Increased Borrower Equity Lower Foreclosure Risk

The Urban Institute (UI) says the surge in
foreclosures predicted as the COVID-19 pandemic drove unemployment to the
highest level since the Great Depression may not materialize, even when the
current forbearances end. Two UI researchers, Michael Neal and Laurie Goodman,
say that even vulnerable homeowners may be spared, and they think they have identified
the reasons.

Mortgage
forbearance rates peaked at 8.55 percent of active mortgage in June 2020 and
began to fall when unemployment rates did. Since
October, however, both unemployment and forbearance rates have flattened. This
has heightened concern that many homeowners could face foreclosure later this year.

The authors say about a quarter of the 2.7 million
borrowers who remain in forbearance plans are continuing to make their
payments, but about 2.1 million are delinquent along with another 1.1 million
homeowners who are not in plans. Forbearance is now scheduled to end mid-year
and many borrowers who haven’t regained their pre-pandemic financial positions
may face the loss of their homes.

UI says this won’t necessarily
happen
, even among government loan borrowers whose risks are higher due to higher-initial-loan
to value (LTV) and debt-to-income (DTI) ratios, lower credit scores and lower
incomes than borrowers with conventional loans. They may benefit from the large
amounts of home equity that borrowers have accumulated through home price
appreciation and the loss mitigation waterfalls
put in place by Fannie Mae,
Freddie Mac, the FHA VA, and the Department of Agriculture’s Rural Housing (RH)
program.

Those
waterfalls, or forbearance off-ramps, allow borrowers options to pay back the past
due amounts
that accumulated during forbearance. The first step in the waterfall
is to repay the forborne amount in a lump sum or over a short period. But,
where a borrower is unable to increase their pre-forbearance payment, they can
revert to their pre-forbearance payment and move the forborne amount to the end
of the loan.

For an FHA mortgage, the forborne
amount becomes a “soft second” or a subordinate loan on which the borrower is
not required to make payments until the house is sold or refinanced. For a GSE
(Fannie Mae and Freddie Mac) loan, the mortgage term is extended. If the
borrower’s then current income is not enough to cover their original monthly
payment, they could qualify for a modification which would lower their monthly
payment. Loss mitigation options are also available to borrowers who did not
utilize forbearance. However, not all borrowers will qualify for a loan
modification and may have to exit homeownership.

Even where borrowers are not
financially stable when forbearance expires and do not qualify for a
modification, those with home equity could still exit the home with their
credit intact and possibly some cash in hand by selling their home and downsizing
or renting. Equity also increases the viability of the waterfall because
lenders are more likely to work out an alternative solution to foreclosure for a
delinquent homeowner who has it.

Of the 3.2 million currently delinquent
borrowers, 626,000 have government loans in Ginnie Mae securities and, because
the average LTV ratio at origination is 96.5 percent for FHA purchase
borrowers, 100 percent for VA loans, and 101 percent for USDA loans, these
borrowers will generally have less equity than those with GSE loans.

Goodman and Neal developed a
methodology to estimate the home equity for government loans that shows that
even among delinquent borrowers less than 1.0 percent have negative equity and
5.5 percent are near negative, a total of 3.6 percent. In the aftermath of the
Great Recession, the latter number was approximately 30 percent.

Further, they found the average
government loan borrower has 22 percent equity. Most of the 3,771 delinquent or
forborne borrowers in negative equity are VA borrowers (2,817), many of which
had origination LTVs of 100 percent. Another 1,000 in negative territory are evenly
split between FHA and RH. Nearly all the negative equity loans were originated
from 2018 to 2020, most in 2020.

The additional 5.5 percent of
borrowers with near-negative equity or less than 5 percent will have none left
after the transaction costs of selling. They have little incentive to sell by
themselves.  

Home price gains (60 percent from
early 2012 through late 2020) have pushed home prices up above their pre-recession
peak by an average of 19.7 percent
, but those increases have been uneven. Many areas
still have prices below the 2005-2006 levels. The share of mortgages with
negative equity range from 0.1 percent in several states to highs of 1.8
percent in Wisconsin and 1.4 percent in Illinois. The share of non-current borrowers
with negative equity or near-negative equity are mostly in the single digits,
with only Wisconsin, Illinois, and Alaska exceeding 10 percent.  These may
be the states that do see significant numbers of foreclosures.

The authors say that even as improvement in the forbearance
rates have slowed along with the decline in unemployment, they still expect far
fewer foreclosures than during and after the Great Recession. Many of today’s
homeowners in distress have both significant equity buffers and improved loss
mitigation tools. The extensions in forbearance terms announced earlier this
month will give struggling borrowers more time to benefit from improved
employment prospects as the economy recovers and to build an equity cushion;
this is particularly critical to homeowners without equity.  A further
extension in forbearance may well be necessary.

Source: mortgagenewsdaily.com

Update: Biden Administration Extends Eviction and Foreclosure Moratorium, Again

Update: The Biden Administration has extended the foreclosure and eviction moratorium for homeowners with federally backed mortgages until the end of June 2021. These same homeowners have until the end of June to request mortgage payment forbearance if they haven’t already done so. The new order also allows up to an additional six months of mortgage forbearance for those who entered mortgage forbearance on or before June 30, 2020. The new order did not address extension of relief for renters.

Renters and homeowners with a federally backed mortgage who are struggling to make monthly payments can breathe easier. President Biden signed an executive order asking federal agencies to extend the moratorium on evictions and foreclosures. Originally set to expire on January 31, the relief now lasts at least another month and in some cases two months, with the possibility of more extensions. 

[Stay on top of all the new stimulus relief developments – Sign up for the Kiplinger Today E-Newsletter. It’s FREE!]

Relief for renters. On September 4, 2020, the Center for Disease Control announced a nationwide halt on evictions for qualified tenants. This was originally set to expire at the of December but was then extended until January 31, 2021. Now Biden has extended it again.

To qualify, tenants must complete a CDC Eviction Declaration Form and give it to their landlord. The form certifies that you have been specifically affected by the pandemic and have exhausted all other avenues for help. There is also an income requirement. Single renters must have earned less than $99,000 ($198,000 for couples) in 2020 or received a stimulus payment. Renters also qualify if they were not required to report income in 2019 to the Internal Revenue Service.

Biden has also requested that Congress provide $30 billion in additional rental assistance. The proposal sets $25 billion aside for direct rental relief to landlords, with the other $5 billion slated to help cover energy and water costs through programs such as the Low Income Home Energy Assistance Program.

Your state may also provide rental assistance. For example, Maryland has suspended evictions for tenants that can demonstrate the pandemic has caused a severe drop in income. In Michigan, utility companies are not allowed to cut off water service until at least March 31, 2021.

Help for homeowners. Holders of  mortgages insured by the Federal Housing Administration or guaranteed by Fannie Mae and Freddie Mac are covered by the Biden administration’s extension of the moratorium on foreclosures and evictions. The foreclosure moratorium for FHA-insured single family mortgages was extended to March 31, 2021. Freddie Mac and Fannie Mae extended its moratorium on foreclosures to February 28, 2021.

The deadline to request forbearance has also been extended. Borrowers with an FHA-insured single family mortgage have until February 28, 2021, to request a forbearance in response to COVID-19.

If your mortgage is owned by a private company, check with your loan provider to see if it provides assistance. For example, Bank of America, Chase and Wells Fargo have their own payment deferral and forbearance programs. If you’re unsure of whether your loan is federally backed or not, call your mortgage servicer and ask. You can also see if Freddie Mac backs your loan at https://ww3.freddiemac.com/loanlookup, or Fannie Mae at www.knowyouroptions.com/loanlookup.

Keep in mind that these relief measures could be extended again as the pandemic continues. When the CARES Act was signed into law in March 2020, the eviction and foreclosure moratoria were slated to last only 60 days.

For more information about stimulus relief that could affect your finances, see 12 Ways the Biden Stimulus Package Could Put (or Keep) Money in Your Pocket.

Source: kiplinger.com

Biden Administration Extends Forbearance and Foreclosure Protections Through June

Good news for Americans who are forced to skip their mortgage payments amid rising unemployment.

The White House is extending the foreclosure moratorium until the end of June for homeowners with mortgages backed by the Department of Housing and Urban Development, Department of Veterans Affairs, and Department of Agriculture. Homeowners will also have until the end of June to request forbearance, which allows them to pause monthly payments.

Originally, both protections were set to disappear at the end of March. The Trump administration put the protections in place almost a year ago as the coronavirus pandemic upended the nation’s economy.

Additionally, the White House announced that homeowners who had entered forbearance before June 30, 2020 will be entitled to an additional six months of mortgage-payment forbearance, broken up into three-month increments. Originally, mortgage borrowers could only receive up to 12 months of forbearance, split up into six-month segments.

The move by the White House comes roughly a week after the Federal Housing Finance Agency announced it would extend the forbearance period for borrowers with loans backed by Fannie Mae and Freddie Mac by three months. All told, the deadlines for forbearance were pushed back for nearly three-quarters of all borrowers with single-family mortgages, the Biden Administration said.

Thus far, the forbearance program has helped to prevent many Americans from becoming delinquent on their home loans, which would have put them at risk of foreclosure. Extending the protections is important, according to economic experts.

“The year-long forbearance initially afforded through the CARES Act seemed sufficient at the time, but the pandemic and its economic fallout is dragging on far longer than had been expected,” said Greg McBride, chief financial analyst at Bankrate.com. He added that the extra six months of forbearance “reflects the reality that long-term unemployment will be an ongoing issue.”

Currently, roughly 5.4% of mortgages across the country are still in forbearance, according to the Mortgage Bankers Association. That level is down from the peak reached last June, when the figure reached well above 8%. However, this winter the number of people exiting forbearance and resuming making their monthly mortgage payments has stagnated in tandem with the bounce-back in employment.

Currently, roughly 5.4% of mortgages nationwide are in forbearance, but around a quarter of these borrowers continue to make monthly payments.

Of the roughly 2.7 million borrowers who are in forbearance, around a quarter have continued to make their monthly payments, according to real-estate data firm Black Knight. There are also around 1.1 million borrowers who are delinquent but did not enter forbearance.

What will happen to all these mortgages when forbearance ends remains an open-ended question. But researchers at the Urban Institute, a think-tank based in Washington, D.C., projected that many people will be able to avoid foreclosure.

“Loss mitigation policies and substantial housing equity can keep foreclosures at bay in most states,” the researchers wrote.

When borrowers exit forbearance, they are not required to pay back all of their missed payments at once in a balloon payment, though loan servicers do offer that as an option. Instead, they can request that the forborne amount be moved to the end of their loan’s duration. That will allow borrowers to resume making payments at the amount they were paying before the pandemic, without incurring extra costs.

Of course, many borrowers will find homeownership unaffordable overall and may not be able to resume making their monthly payments ever because of extended job loss. For most of these borrowers, the higher level of equity built in their homes, especially compared with the foreclosure crisis that preceded the Great Recession, will serve as a buffer.

Researchers at the Urban Institute calculated that less than 1% of mortgages nationwide have negative equity, meaning the loan is larger than the home is worthy. And only 5.5% of loans were found to be near-negative equity. Following the Great Recession, nearly a third of homes were in negative or near-negative equity, they said.

Home-price gains over the past year have meant that most homeowners could sell their property and come out ahead on the sale — though home prices in some parts of the county, such as Chicago and Baltimore, remain below their record peaks.

As a result, most homeowners in forbearance could afford to sell their home rather than go into foreclosure. Of course, these homeowners may struggle to find other housing. And if foreclosure numbers were to increase, that could begin to have an impact on home values across the country and push more people into negative equity.

“A further extension may well be necessary,” the Urban Institute researchers wrote.

Source: realtor.com