Homeowners with mortgages backed by Fannie Mae or Freddie Mac will get three more months of protection from foreclosure, the government announced Thursday.
The extension of protections, which previously expired March 31, brings the most common type of mortgages in the country in line with other federally-backed loans given the same extension last week. Now the ban on foreclosures applies through June 30 for an estimated 70% of homeowners.
Together with relief offered by private lenders, the measures have been remarkably successful at preventing people from losing their homes in an economy crushed by the COVID-19 pandemic. New foreclosures remained near record lows in January, according to Black Knight, a mortgage analytics company.
In addition to the moratorium on foreclosures, the Federal Housing Finance Agency announced homeowners who are in pandemic-related forbearance plans as of Feb. 28 can skip payments for an additional three months—up to 18 months rather than 15 months. Borrowers can repay their missed payments at the time the home is sold or when the mortgage matures.
The government intervention has some economists wary a massive tidal wave of foreclosures will be unleashed when protections end. But one recent Urban Institute analysis found that thanks to rising home prices, many distressed homeowners now have “equity buffers” that will allow them to sell their homes, if needed, and either rent or move into a smaller house, potentially with extra cash in hand.