Coronavirus: Effects on Foreclosures, Evictions, and Loan Forbearance

Posted on April 20, 2020

Like many others, the coronavirus, also known as COVID-19, may have caused you to lose your job or suffer a loss of income. If you’re a homeowner, this loss can be devastating. It may prevent you from being able to pay your mortgage as you try to use the money you do have to care for your family. 

Fortunately, many programs are being developed to help you during this challenging time. Here are a few things to know if you’re facing uncertainty with your mortgage.

Foreclosure and Eviction Relief

To provide immediate relief to homeowners and renters, the Department of Housing and Urban Development suspended all foreclosures and evictions through May 17, 2020. Single-family homeowners with Federal Housing Administration-insured mortgages will benefit from the suspensions.

A recent article by CNN highlighted a statement by Secretary of Housing and Urban Development Ben Carson about the suspensions. According to Carson, "Today's actions will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes and help steady market concerns." He added that this "will provide homeowners with some peace of mind during these trying times."

Forbearance Plans

If the coronavirus has caused a homeowner to lose income, efforts are currently underway through the federal government to lower or suspend the homeowner’s mortgage payments. Federal regulators recently ordered mortgage lenders to give homeowners more flexibility through Fannie Mae and Freddie Mac, which are two government-sponsored organizations that provide funding in the mortgage market. 

This order covers home loans that are guaranteed by Fannie and Freddie—or about half of the mortgages in the country. However, it’s expected that other mortgage companies will soon follow the policy as well. 

If you have experienced a loss of income, you may be able to request lowered payments or postpone making payments for a time. Mark Calabria, director of the Federal Housing Finance Agency, was recently quoted in an article by NPR as saying, "That forbearance is up to 12 months, depending on their particular situation." 

Mortgage Help Options

In addition to the forbearance being offered for home loans guaranteed through Fannie Mae and Freddie Mac, some major lenders are also offering a temporary pause on payments if you have been furloughed or lost your job.

In a recent article in the Dallas Morning News, Robert Broeksmit, president and CEO of the Mortgage Bankers Association explained the options for homeowners. “If they have been laid off or had a drop in work hours, are ill or affected, there will be a program available to them to forbear mortgage payments,” he said. “Generally, it would be up to six months. If the hardship endures beyond that, there could be another conversation that could extend it up to another six.” 

These delays have been compared to those used in the event of a natural disaster. However, Broeksmit said, “But this is a lot more complex.” 

Here for you

We want to provide you with information and resources that help you better understand the steps that are being taken and how you can find help through this challenging time with your home. If the coronavirus has caused a hardship for you, your first step should be to contact your mortgage company and discuss all of your options with them.

If you are interested in selling your house during this time, we are still buying. Please let us know how we can help!