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GSEs and FHA Take Action to Protect At-Risk Renters and Homeowners

The Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac (the GSEs) are extending the moratorium on single-family real estate-owned (REO) evictions until Thursday, September 30, 2021. The REO eviction moratorium applies to properties that have been acquired by a GSE through foreclosure or deed-in-lieu of foreclosure transactions.

On June 24, both the FHFA and the Center for Disease Control (CDC) extended COVID-related moratoria on foreclosures and evictions originally set to expire June 30, granting a further extension until Saturday, July 31, 2021.

“The pandemic continues to have an outsized impact on the ability of Americans to meet their monthly rent or mortgage payments,” said FHFA Acting Director Sandra L. Thompson. “Today’s extension of the eviction moratorium protects particularly vulnerable Americans who otherwise would be at risk of losing a place to live.”

The REO eviction moratorium is just the latest step FHFA has taken to benefit homeowners, renters, and the mortgage market during the pandemic. FHFA continues to monitor the effect COVID-19 has on borrowers, the GSEs and their counterparties, and the mortgage market. FHFA may revisit its policies based on updated data and health risks.

The FHFA has encouraged landlords of properties backed by the GSEs to apply for Emergency Rental Assistance before starting the process of evicting a tenant for non-payment of rent.

“As mentioned in the joint statement​ issued today by the leaders of the agencies that oversee federal housing programs, billions of dollars are available in Emergency Rental Assistance to help tenants stay safely in their homes. Landlords can, and should, apply for the funds if their tenants are unable to pay rent due to financial difficulties resulting from the COVID-19 pandemic,” said Thompson. “Evictions hurt families and cost landlords money, so they should be avoided if possible, especially during the pandemic. Emergency Rental Assistance is available to keep tenants in their homes while allowing property owners to collect rent.”

The Federal Housing Administration (FHA) has also announced an extension of its moratorium on evictions for foreclosed borrowers and their occupants through September 30, 2021, and noted the expiration of the foreclosure moratorium on July 31, 2021. This extension is part of President Joe Biden’s announcement on July 29 that federal agencies will use their authority to extend their respective eviction moratoria through the end of September.

“We must continue to do everything within our authority to make sure that foreclosed borrowers who are impacted by the pandemic have the time and resources to secure safe and stable housing, whether it’s in their current homes, or by obtaining alternative housing options,” said Principal Deputy Assistant Secretary for Housing Lopa P. Kolluri. “We don’t want to see any individuals or families displaced unnecessarily while trying to recover from the pandemic.”

Mortgage servicers must continue to halt evictions for FHA Single Family Title II forward and Home Equity Conversion Mortgage (HECM) foreclosed properties, except for those properties that are legally vacant or abandoned. Servicers may initiate or continue foreclosures in accordance with FHA requirements once the Single Family foreclosure moratorium expires as planned on July 31, 2021, but may not evict a foreclosed borrower or other occupant.

Yesterday, U.S. President Joe Biden urged Congress to extend the July 31 eviction moratorium, calling on the U.S. Departments of Housing and Urban Development, Agriculture, Veterans Affairs, local municipalities, and other agencies to do the same. The Biden Administration is unable to enact an extension on its own due to a recent Supreme Court ruling dictating that new legislation would be necessary for the CDC to extend its federal moratorium past the July 31 deadline.

“The President urges states and localities, which long ago received Emergency Rental Assistance–including through the American Rescue Plan–to urgently accelerate their efforts to disburse these funds given the imminent ending of the CDC eviction moratorium,” read a White House press statement. “With some cities and states demonstrating their ability to release these funds efficiently to tenants and landlords in need, there can be no excuse for any state or locality not to promptly deploy the resources that Congress appropriated to meet this critical need of so many Americans. The Administration remains committed to doing everything in its power to keep people safely and securely housed, which is essential to the health, well-being and dignity of all of us.”

Also taking action to extend homeowner and renter protections was Rep. Maxine Waters, Chairwoman of the House Financial Services Committee, who introduced H.R. 4791—Protecting Renters from Evictions Act of 2021, a measure that would extend the eviction moratorium through December 31, 2021.

According to a Supreme Court opinion written by Justice Brett Kavanaugh, the eviction moratorium can only be extended by Congress and this legislation will do just that,” said Rep. Waters. “Extending the moratorium until the end of the year is the right thing to do to prevent increases in homelessness and the spread of the coronavirus, while states and communities work to distribute the $46.6 billion in emergency rental assistance provided by Congress.”

Earlier in the week, the Mortgage Bankers Association (MBA) estimated that approximately 1.74 million U.S. homeowners continued to seek homeowner protection through forbearance plans.

“The current eviction moratorium expires on July 31, putting millions of people at great risk of eviction and homelessness,” said Rep. Waters. “In one of the wealthiest countries in the world, this is unacceptable. Even before the pandemic, more than 580,000 people are experiencing homelessness on any given night, and 10.5 million households were paying more than 50% of their income on rent.

“While Congress appropriated funding for emergency rental assistance, it is now up to state and local governments to expedite the distribution of this relief,” continued Rep. Waters. “However, these funds have been slow to get out. According to the U.S. Department of the Treasury, only $3 billion in emergency rental relief reached households by the end of June. Our efforts to provide emergency rental assistance will prove meaningless if families are evicted before receiving relief. We must also recognize the reality that, unlike big corporate landlords that often have reserves to fall back on, small mom-and-pop landlords depend on rent to cover their monthly mortgage payments and other costs.”

The House Committee on Rules called an emergency meeting for Friday morning to push H.R. 4791 before tomorrow’s deadline.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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