The Quest to Head off Evictions and Foreclosures in the Second Half of 2021
UPDATE: As we go to press in the first week of August 2021, the CDC has just announced a new Covid-19 eviction moratorium. The eviction ban is slated to last through Oct. 3. It covers most U.S. counties with significant numbers of Covid-19 Delta variant cases, and will apply to about 90% of the national population. As the new announcement will likely face court challenges, the story continues…
The eviction moratorium from the Centers for Disease Control and Prevention (CDC) is over. State and local agencies that received the U.S. Treasury Department’s Emergency Rental Assistance funds have been urged to hurry and distribute the funds. Just $3 billion out of more than $46 billion in emergency relief had reached rental households by July 1st.
With emergency funding tied up at state and local levels, the pandemic keeps frustrating the U.S. residents trying to catch up with their house payments. So, in July 2021, the Biden administration stepped up foreclosure-prevention measures, and directed federal agencies to extend their eviction holds through September.
As of August 2021, here’s the latest.
Available Now: Relief on Government REO Homes Through September
Following a request from the U.S. president, homeowners with federally backed mortgages can get loan modifications featuring a 25% cut in principal and interest payments. Additionally, as of Jul. 30, 2021 (the day before the CDC moratorium expired), term extensions are available, giving people more time to pay. Certain extensions cover both homeowners and renters through Sept. 30, 2021.
Over the coming months, holders of mortgages backed by the Federal Housing Administration (FHA) may file COVID-19 recovery partial claims. Those who can start paying their mortgages again, can seek interest-free subordinate liens to take care of skipped payments at the end (or refinancing) of their mortgages.
The FHA has extended its foreclosure-related eviction moratorium. At least through Sept. 30, occupants may stay in properties that have faced Single-Family Title II forward and Home Equity Conversion (reverse mortgage) foreclosures. The current pressures on the FHA, we should mention, are heavy. As of June 2021, the FHA held 7.6 million outstanding loans, with around 10% considered seriously delinquent.
The Department of Agriculture (USDA) will hold off on new foreclosures unless and until mortgage relief options are sought first. And the Department of Veterans Affairs (VA) is barring evictions from VA loan properties.
Fannie and Freddie Leave Eviction Relief in Place Through September
Fannie Mae and Freddie Mac have extended their own moratoria on evictions until Sept. 30 for properties they hold following foreclosure or deed-in-lieu proceedings.
To avert foreclosure, holders of conventional mortgages can reposition missed payments to the end of their term, modify their mortgages, extend them up to 40 years, and apply for reduced mortgage payment options.
☛ Important note: Investor-owners who hold properties backed by Fannie Mae or Freddie Mac must promptly apply for Emergency Rental Assistance before moving to evict people with Covid-related financial hardships.
The Federal Housing Finance Agency notes that Fannie and Freddie may continue revising their policies as economic information and health situations change. Owners and renters are advised to check the government’s Consumer Financial Protection Bureau website for updates about new options for financial relief and deadlines.
Peer Pressure in Congress
As our readers know, the CDC’s embattled eviction moratorium for renters ran out at the end of July 2021. Biden’s administration can’t unilaterally extend it. The Supreme Court said that’s up to the legislature.
Rep. Maxine Waters took the cue, introducing the Protecting Renters from Evictions Act of 2021. The bill sets out to keep “more than 11.4 million people struggling to pay their rent” in their homes through the end of the year, and to slow the coronavirus spread, while states and localities distribute federal emergency funding for renters and landlords. But the moratorium is over, and this bill has not succeeded in the House.
Rep. Cori Bush, a Missouri Democrat, camped overnight on the Capitol steps to rebuke members of the House for beginning their six-month summer recess during the emergency. Bush, for whom eviction is an actual life experience, urged colleagues to stay and garner the votes needed to send the bill to the Senate.
This Was a Crisis Waiting to Happen. How Will the Country Transcend It?
U.S. housing has long been a tale of two countries. Some people and companies are profiting from the boom in housing prices. Others are struggling.
In 2019, according to the Department of Housing and Urban Development (HUD) Annual Homeless Assessment Report:
- More than half a million people experienced homelessness.
- Street homelessness was surging along the U.S. West Coast as housing costs soared.
- More than 35,000 unaccompanied youth and children were homeless in the United States.
Additionally, as Maxine Waters points out, many more lived their lives on the edge. Of rental households, more than ten million were spending most of their income paying rent.
Fast-forward to this moment. Rep. Waters now cites 11.4 million cash-strapped renters. Many could be evicted by real estate corporations, now that the moratorium has ended.
Access to Federal Assistance for Renters and Owners of Rental Homes
The Consumer Financial Protection Bureau seeks to connect these 11.4 million people with available funding. Its website instructs renters and owners alike to apply for Emergency Rental Assistance funding through state and local channels. The funds can help renters pay for rent, utilities, or moving services.
As for homeowners, those impacted by shutdowns and other virus-related setbacks may still be struggling with mortgage payments. Some will decide to lower their payments and interest by refinancing their loans.
☛ Pro tip: If you go with an FHA loan, look out for the additional monthly PMI charge. Learn more about PMI at the Deeds.com Guide to Private Mortgage Insurance.
When Life Turns Upside Down
Finding new places to live is no easy feat for people being displaced while a drawn-out pandemic pummels U.S. residents. Housing inventory is at a low ebb. Many foreclosed properties aren’t marketable.
Granted, demand for homes (and workers) is driving a new focus on the creation of housing that’s affordable to working people. And that’s good. But the transition is painful. Moreover, policy changes and new options are uneven across the country.
At this time, many people are just hoping not to wake up tomorrow to find a sheriff’s notice on their doors. As Cori Bush described the experience: “Your whole life turns upside down.” Over the coming weeks, that’s about to happen to millions of people.
Supporting References
The White House: Statement by White House Press Secretary Jen Psaki on Biden-Harris Administration Eviction Prevention Efforts (Jul. 29, 2021).
The White House: Fact Sheet – Biden Administration Announces Additional Actions to Prevent Foreclosures (Jul. 23, 2021).
H.R. 4791 – Protecting Renters from Evictions Act of 2021 (PDF). See also U.S. House Committee on Financial Services: Waters Introduces Legislation to Extend Federal Eviction Moratorium to Keep Families Housed (Jul. 29, 2021).
Federal Housing Finance Agency (FHFA) News Release: FHFA Extends COVID-19 REO Eviction Moratorium Through September 30, 2021 (Jul. 30, 2021).
Eric C. Peck for The Five Star Institute’s DS News®: FHA, FHFA Extend Eviction Moratoria Through September (Jul. 30, 2021).
Symone Strong for Builder Online: The Federal Housing Administration (FHA) Announced an Extension of Its Moratorium on Evictions for Foreclosed Borrowers and Their Occupants Through September (Jul. 30, 2021).
Kristian Hernández for PewTrusts.org: As CDC’s Eviction Moratorium Ends, States Prepare for Flood of Cases (Jun. 22, 2021).
Richard J. Andreano, Jr. for Ballard Spahr LLP: While Foreclosure Moratorium Ended, FHFA, HUD, VA and USDA Extend Eviction Moratoria (Aug. 2, 2021).
Photo credits: Conger Design, via Pixabay, and Laurenz Heymann, via Unsplash.