FHA Extends Foreclosure, Eviction Relief for Homeowners

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Homeowners with FHA-insured mortgages are getting another two months of reprieve from the Federal Housing Administration (FHA), which said Monday it’s extending the deadline on its foreclosure and eviction moratorium through Feb. 28.

The moratorium, originally set to expire Dec. 31, prohibits servicers from initiating or proceeding with foreclosure and foreclosure-related eviction actions for FHA-insured, single-family forward and reverse mortgages, except for those secured by legally vacant and abandoned properties.

The FHA is also extending the deadline for single-family borrowers with FHA-insured mortgages to ask their mortgage servicer to defer or reduce their mortgage payments for up to six months. This relief can be extended for an additional six months, the FHA said in the release.

This is the fourth extension of the moratorium, first issued in March, to provide relief to homeowners with FHA-insured mortgages during the COVID-19 pandemic. FHA-insured mortgages are popular with low- and moderate-income homebuyers, as well as those buying for the first time, because of the lending standards—as little as 3.5% down, and a minimum credit score requirement of just 500 (with 10% down).

“Today’s foreclosure moratorium and forbearance extensions for single-family homeowners ensure American homeowners continue to have the critical relief and support they need to get back to financial stability,” Department of Housing and Urban Development Secretary Ben Carson said in Monday’s announcement.

The FHA also said it is extending provisions for lenders and servicers to help them service borrowers amid COVID-19 restrictions. They will have until March 31 to provide insurance endorsements on single-family mortgages in forbearance.

The new deadline also applies to temporary reverification of employment guidance and exterior-only appraisal inspection, as well as provisions for verification of self-employment, rental income, and 203(k) Rehabilitation Mortgage escrow accounts for fixer-uppers that don’t qualify for FHA financing.

This extension by the FHA is different from the one announced earlier this month by the FHFA—Federal Housing Finance Administration. The FHFA extended the foreclosure and eviction moratorium on Fannie Mae and Freddie Mac-backed mortgages to Jan. 31.