Fannie-Freddie Foreclosure Suspension Extended to Year’s End
(Bloomberg) -- Fannie Mae and Freddie Mac will extend their suspension of mortgage foreclosures through at least the end of the year, providing more relief for homeowners who are grappling with the economic pain of the coronavirus.
A moratorium on evictions from properties owned by Fannie and Freddie will also be extended until at least Dec. 31, the Federal Housing Finance Agency said in a Thursday statement. The relief on foreclosures and evictions were both set to lapse at the end of the month.
The extensions are intended to keep consumers from being kicked out of their residences even if they can’t pay their mortgage or rent amid a surge in layoffs and lost income. In statements, Fannie and Freddie said the eviction moratorium applies to properties that they’ve obtained as a result of foreclosures. The eviction suspensions don’t apply to tenants living in homes that have not gone into default, Fannie and Freddie said.
FHFA Director Mark Calabria, whose agency regulates Fannie and Freddie, said the extensions will protect more than 28 million borrowers with a loan guaranteed by the companies. The move will add $1.1 billion to $1.7 billion to the expenses that Fannie and Freddie have already absorbed due to the coronavirus, the FHFA projected. The companies backstop about $5 trillion of home loans.
Congress has also protected homeowners from foreclosures by allowing borrowers affected by the pandemic to delay their monthly payments for more than a year without going into default. That provision was part of the $2 trillion stimulus bill that lawmakers approved in March.
Fannie and Freddie, which have been under government control since the 2008 financial crisis, don’t make loans. Instead, they buy mortgages issued by lenders and package them into securities that are sold to investors. Bondholders are guaranteed payment even if borrowers default.
The Federal Housing Administration, which is part of the Department of Housing and Urban Development, also extended its suspensions of foreclosures and evictions until the end of the year. The FHA helps lower-income Americans and first-time buyers obtain loans by insuring their mortgages.
Democratic lawmakers said the relief provided by the FHA and Fannie and Freddie falls far short of what’s needed to prevent a potential foreclosure and eviction crisis.
House Financial Services Committee Chairwoman Maxine Waters argued in a statement that the FHA move “does not help one renter” because it only covers people living in properties that HUD has obtained through a foreclosure.
Sherrod Brown, the top Democrat on the Senate Banking Committee, urged the Trump administration and Republican lawmakers to work with Democrats on legislation that will provide “vital assistance” to keep renters and homeowners in their residences, according to a statement.
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