In addition, those who contracted the virus may experience long-term effects that will impact their ability to work. However, that recovery will likely be uneven and the financial challenges for millions of families could continue as workers struggle to regain a foothold. These short-term actions may relieve some financial distress and forestall some foreclosures and, in the longer term, the economy hopefully will recover.
Private non-government-backed lenders and servicers also have volunteered mortgage relief. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, borrowers can initiate a 180-day forbearance and foreclosure moratorium for any federally-backed mortgage loan. In addition, the Federal Housing Finance Administration (FHFA) ordered Fannie Mae and Freddie Mac loan servicers to lower or suspend borrowers’ mortgage payments for up to 12 months if homeowners have lost income because of the pandemic. The Department of Housing and Urban Development (HUD) took action by placing a 60-day moratorium on foreclosures for loans insured by the Federal Housing Administration (FHA). Policymakers and financial institutions have taken several immediate steps to help homeowners who have lost income during this period. Beyond our current and pressing concerns about health, mortality rates, personal financial distress, and impacts on businesses and the national economy, we will likely soon be facing an increase in loan defaults and foreclosures, as significant numbers of people are unable to make their mortgage payments. The Briefs were being finalized just as the coronavirus pandemic was beginning.
#Mortgage defaults series
A new series of Issue Briefs authored by Rachel Bratt, a Senior Research Fellow at the Joint Center for Housing Studies and former visiting scholar at the Federal Reserve Bank of Boston, offer insights about HUD’s regulations and procedures concerning mortgages near foreclosure/end-stage default following the Great Recession.
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