If you lost your job as a result of the COVID-19 pandemic and you are struggling to pay your mortgage payments, you may be able to breathe a temporary sigh of relief. According to a recent report in HousingWire, the Department of Housing and Urban Development (HUD) just announced that the federal Housing Administration (FHA) is going to extend its existing moratorium on foreclosures. Initially, the moratorium was set to expire in May and was extended until June 30. Now homeowners have additional protections with another two-month extension until August 31, 2020. We want to tell you more about the additional extension of the foreclosure moratorium and to provide you with information about options for preventing foreclosure.
FHA Will Extend Foreclosure Moratorium Until August 31, 2020
The recent announcement by HUD explains that the foreclosure and eviction moratorium from the FHA will be extended for a second time through August 31, 2020. However, it is important to understand that this moratorium does not apply to any homeowner with a mortgage. Rather, it applies to “homeowners with FHA-insured Title II Single-Family forward and Home Equity Conversion mortgages.” Other homeowners with different types of loans are not eligible for the extension on the moratorium and could be at risk of foreclosure if they do not make mortgage payments.
For those who are covered by the extended moratorium, what does the extension mean in practice? Mortgage servicers will need to “halt all new foreclosure actions and suspend all foreclosure actions currently in progress, excluding legally vacant or abandoned properties.” In addition, any properties that are FHA-insured and are designated as Single-Family properties will have an eviction moratorium, meaning that servicers will need to stop any evictions. That eviction moratorium does not apply to properties that are legally vacant or abandoned. The eviction protections in place apply to renters who are renting from a landlord with a federally backed mortgage.
Options if You are Not Eligible for the Foreclosure Moratorium
If you own a home that is not eligible based on the classifications explained above, you may still have options to avoid or stop a foreclosure. The CARES Act outlines certain mortgage forbearance options, which you should discuss with your mortgage servicer. To qualify for CARES Act protections, your mortgage will need to be federally owned or backed by one of the federal agencies or entities, such as HUD, the FHA, the USDA, the U.S. Department of Veterans Affairs, or Fannie Mae or Freddie Mac.
If your mortgage is not backed by the federal government, your mortgage servicer may still be willing to offer a forbearance for coronavirus-related hardship. If you cannot obtain a forbearance and cannot make your mortgage payments, it may be possible to work with a foreclosure defense lawyer on alternative options. You may be able to have your mortgage refinanced, and if necessary, you may be able to stop a foreclosure by filing for Chapter 13 bankruptcy. However, in order to qualify for Chapter 13 bankruptcy, you will need to be able to prove that you have income to make payments on a debt reorganization plan.
Seek Advice from an Oak Park Foreclosure Defense Attorney
If you have questions or need assistance avoiding foreclosure, an experienced Oak Park foreclosure defense lawyer can speak with you today. Contact the Emerson Law Firm to learn more about how we can assist you.
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