Thursday, February 7, 2019

How the Government Shutdown has Affected Foreclosures

Just because the government shutdown is over does not mean that it is not having lingering effects; its effects are still being felt among government employees and consumers across the country. One area in which the government shutdown is still plaguing consumers concerns homeowners working on foreclosure avoidance and homeowners who are in government mortgage programs. How is the shutdown continuing to impact these groups of people? In short, during the government shutdown, many employees from the U.S. Department of Housing and Urban Development (HUD) were furloughed, meaning that they were in effect sent home from work without pay. As you might recall, the government shutdown lasted over a month.

During that time, people who were relying on HUD services to avoid foreclosure did not get the help they needed, according to a recent article in The Hill. And that lack of help has now put a significant number of homeowners at risk of losing their houses.

How the Government Shutdown Affects Homeowners Who Need Mortgage Help
During the government shutdown, a large number of HUD workers were furloughed, which meant that those workers could not handle cases related to foreclosure—from requests for modifications to questions about foreclosure cases that already have been started. As a result of being unable to handle new cases coming in and questions pertaining to existing cases, many HUD employees returned to work once the shutdown ended to find that cases “piled up while critical agency resources were unavailable.”

The fact that so many HUD workers were furloughed also means that they were unavailable to provide information to homeowners who are facing foreclosure this month. Indeed, according to the article, one elderly woman had been working with a HUD representative prior to the shutdown after being wrongfully denied entry into a foreclosure avoidance program for newly widowed spouses by her lender. But because no one at HUD could help that woman during the month of January—a critical time for her case, which is coming up for foreclosure this month in February—she may now be at much greater risk of losing her home.

This particular example is only one of many related to the lingering harms of the government shutdown on homeowners hoping to avoid foreclosure.

Millions of Borrowers may Have Been Affected by the Shutdown
The article underscores that more than nine million borrowers currently have mortgages provided by, or insured by, government agencies including HUD or the U.S. Department of Agriculture (USDA). The majority of these homeowners are “low-income, seniors, and/or residents of rural areas.” That is to say that most of these homeowners do not have other places to turn for help in avoiding foreclosure. If the government agency that handles their mortgage is closed, then most of those homeowners simply do not get help or answers to their questions. While many HUD employees were furloughed, so were employees at the USDA.

Currently, the article suggests that “thousands” of homeowners likely may lose their homes in the near future due to the shutdown—had HUD and the USDA been open, those homeowners would not be facing foreclosure today. Since the government shutdown lasted for such a long time, there is currently a “substantial backlog of requests for assistance,” which means that those same homeowners may not be able to obtain help from HUD or the USDA any time soon.

Consumer protections advocates argue that the agencies should extend foreclosure deadlines by the same amount of time as the government shutdown and should “issue a stay on foreclosures until they clear the backlog of pending requests for assistance.” Whether such steps will be taken remains to be seen.

Contact an Oak Park Foreclosure Defense Lawyer
In the meantime, if you need help avoiding foreclosure, an Oak Park foreclosure defense attorney can assist you. Contact the Emerson Law Firm to learn more.

See Related Blog Posts:

Reading the FDCPA: Are Foreclosure Actors Debt Collectors Under the Law?
Foreclosure Evictions Postponed for the Holiday Season