Key Highlights

  • HUD announced FHA extending its foreclosure and eviction moratorium and initial forbearance requests through February 28, 2021
  • More borrowers seeking relief as rising COVID cases trigger layoffs and business restrictions
  • Those exiting forbearance without suspended payments up to 5.49%
  • Ginnie Mae loans (loans backed by FHA) increased to 7.79% while forbearance requests from Ginnie Mae borrowers now at highest level since week ending June 14

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Head’s up…the Department of Housing and Urban Development (HUD) announced that the Federal Housing Administration (FHA) is extending all foreclosure and eviction moratoria applying to FHA single-family home borrowers through February 28 2021. Only those living in legally vacant or abandoned properties may be evicted.

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Head’s up again…the FHA announced that it has extended the deadline for initial forbearance requests for FHA-backed mortgages to February 28, 2021. Factoring in the FHA grace period of six months and a possible six-month extension after February 28 2021, some FHA borrowers could well be in forbearance into February 2022.

The FHA also extended its foreclosure moratorium for borrowers backed by Fannie Mae and Freddie Mac loans until January 31 2021

According to the Mortgage Bankers Association (MBA), the forbearance rate of mortgages with suspended payments increased this week for the second time in six months to 5.49%. On top of this increase, Mike Fratantoni, senior vice president and chief economist with the MBA said that more borrowers are requesting forbearance relief as surging COVID cases trigger more layoffs and business restrictions.

Loans backed by the Federal Housing Administration (FHA) via Ginnie Mae appear to be the most vulnerable. More forbearance requests came in from Ginnie Mae borrowers than at any other time since the week ending June 14, an uptick of 7.79%.

The FHA strongly encourages its borrowers to contact their loan servicers now in order to get access to loan and repayment options.

A word of caution from the Urban Institute…its researchers predict that the current 2.7M borrowers remaining in forbearance may well find themselves in worse financial shape than the 3.5M who have already exited the program. “Households that are still in forbearance, not making payments, and scheduled to come out of forbearance next year will need additional support.”

Urban Institute researchers continued. “About 23% of households in forbearance said they did not know whether they well have to make an increased monthly payment or a lump-sum payment to their mortgage servicer once forbearance ends. 54% said they have no or slight confidence that they will be able to resume monthly payment when forbearance ends.”

  

 

Thanks to the Federal Housing Administration, the Urban Institute and HousingWire.

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