Monday, March 23, 2020

Foreclosures Suspended Due to Coronavirus

If you are struggling to make mortgage payments amidst the coronavirus crisis, you should know that you are not alone. Many homeowners are struggling with business closures and job loss, making it difficult and even impossible to pay monthly mortgage payments. For many homeowners who were already struggling, the coronavirus outbreak is exacerbating financial problems that already existed. According to a recent report in CNN, the federal government will put a hold on certain foreclosure activity due to coronavirus until the end of April.

Single-Family Homes and Foreclosure Halt Until End of April
If you have a mortgage on a single-family home and that mortgage is a Federal Housing Administration-insured mortgage, you will not be at risk of foreclosure until the end of April. According to the report, Trump indicated that “the Department of Housing and Urban Development is providing immediate relief to renters and homeowners by suspending all foreclosures and evictions until the end of April.”

HUD Secretary Ben Carson explained that the temporary suspension of foreclosure activity “will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes, and help steady market concerns.”

Ways of Avoiding Foreclosure
While homeowners who are struggling to make monthly mortgage payments can have some relief from the news that foreclosure activity on FHA-insured mortgages will be put on hold until the end of April, it is still important to think about ways to stop foreclosure from that point onward. Temporary relief is important for homeowners, but anyone who is struggling to make mortgage payments and is at risk of losing their home should work with a foreclosure defense attorney to make a longer-term plan. An article in Bankrate cites the following ways that struggling homeowners can stop a foreclosure:
  • Contact the lender to find out about your options: While homeowners often assume that the lender will not provide any relief—and this certainly may be true in a number of cases—it is important to keep in mind that lenders do not want to go through a foreclosure process if they can find a way to be repaid by working with the homeowner. If a lender thinks a homeowner may be able to get back on track with mortgage payments through refinancing or a loan modification, for example, the lender may offer these or other options for loss mitigation.
  • Loan modification: Like we mentioned above, a mortgage lender or servicer often has the ability to provide homeowners with a loan modification to lower monthly mortgage payments. A modification can involve lowering the interest rate or shifting the terms of the loan.
  • Deed-in-lieu of foreclosure: This is not an option that allows a homeowner to stay in the home, but it can prevent a foreclosure. With a deed-in-lieu of foreclosure, the homeowner gives the property back to the lender to avoid the foreclosure.
  • Short sale: This is also an option that requires the homeowner to leave the home, but it can prevent a foreclosure from affecting the homeowner’s credit. With a short sale, the lender allows the homeowner to sell the house for an amount that is less than what they owe on the mortgage, and the lender agrees to forgive the remaining amount.
  • File for Chapter 13 bankruptcy: This is an option that allows a homeowner to stay in the home and to catch up on mortgage payments. With a reorganization bankruptcy, the automatic stay will stop the foreclosure from happening and will allow the homeowner to create a repayment plan for repaying the lender.
Contact an Oak Park Foreclosure Defense Lawyer
If you have questions about preventing foreclosure, an Oak Park foreclosure defense attorney can assist you today. Contact the Emerson Law Firm for more information.

See Related Blog Posts:

Five Things to Know About Foreclosure in Illinois

How the Foreclosure Crisis Continues to Affect Single-Family Homes


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