For the second time since President Joe Biden took office, his administration has extended a foreclosure ban and mortgage forbearance for borrowers as the coronavirus pandemic and its impact on the economy drag on.
In an announcement Tuesday, the White House said the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) had together extended mortgage relief programs banning foreclosures and allowing for delayed mortgage payments.
This includes extending a foreclosure moratorium for homeowners through June 30 and extending a mortgage payment forbearance enrollment window until June 30 for borrowers who wish to request forbearance. The agencies will also provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020, the White House said.
“These critical protections were due to expire in March, leaving many at risk of falling further into debt and losing their homes,” the announcement said. “Now, homeowners will receive urgently needed relief as we face this unprecedented national emergency. Today’s action builds on steps the President took on Day One to extend foreclosure moratoriums for federally guaranteed mortgages.”
Last week, the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, extended forbearance by up to three months for eligible borrowers with a mortgage backed by Fannie or Freddie. Combined, these actions will cover 70 percent of existing single-family home mortgages, according to the White House.
“Today’s actions directly benefit the 2.7 million homeowners currently in COVID forbearance and extend the availability of forbearance options for nearly 11 million government-backed mortgages nationwide,” the release said.
Unemployment rates have been sky high during the pandemic. More than 1 million Americans continue to file unemployment claims each week.
“This is a recognition of the reality that millions of people are unemployed or underemployed as a result of COVID-19, and we’re not going to return to full employment anytime soon,” said Holden Lewis, home and mortgage specialist at NerdWallet, in a statement.
In a statement, Greg McBride, Bankrate.com’s chief financial analyst, said that long-term unemployment will be an ongoing issue even as the pandemic subsides and the economy begins to re-open.
“Forbearance enrollment has been extended through June 30th, which will prove hugely beneficial to those that lose their jobs in the months ahead,” he said.
The federal agencies will consolidate resources available to homeowners and renters to help them avoid foreclosure or eviction at consumerfinance.gov/housing.
The announcement did not mention a nationwide eviction ban currently set to expire on March 31. However, McBride said the relief to homeowners would also “benefit renters whose landlords are getting relief on their federally-backed mortgages from these provisions.”
In the announcement, the administration pushed Congress to pass the $1.9 trillion stimulus package Biden has proposed, the American Rescue Plan.
“The rescue plan creates a Homeowners Assistance Fund which will provide states with $10 billion to help struggling homeowners catch up on their mortgage payments and utility costs,” the release said. “This relief is critical for homeowners with mortgages in the private market who are not able to take advantage of today’s actions and may face longer term challenges.”