Pub. 10 2020-2021 Issue 2

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S September • October 2020 11 Foreclosure Protection: Where Are We Now? T he COVID-19 pandemic has changed American life as we know it. As the country continues to deal with the health crisis, the effects of containment measures ripple through the American economy. Unemployment remains high as state economies expand and contract in inverse proportion to the virus’s spread. Regulators are in an arms race with rapidly changing markets, forcing banks to adapt to an ever-changing regulatory landscape. Even as we struggle to deal with the immediate concerns, we know the effects of this pandemic will be with us for some time. Economic shocks will continue to reverberate and play out in the housing markets around the country. As we shift into the next phase of operating in the pandemic and consider what options exist to help struggling mortgage borrowers, we should take note of the status of the expansive mortgagor protections passed by Congress, federal agencies and other government authorities. FEATURE ARTICLE Protection for Federally Backed Mortgage Loans In the early days of the pandemic, Congress passed the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. One of the primary sections of this law established a 60-day moratorium on foreclosure proceedings against home- owners with federally backed mortgage loans. The CARESAct’smortgage foreclo- sure moratorium applied to single-fam- ily residential mortgage loans secured, guaranteed or made by FHA, USDA, VA, or Fannie Mae or Freddie Mac. Original- ly scheduled to expire at the end of June, the various agencies extended the mora- torium on foreclosures and evictions un- til Aug. 31, 2020. The CARES Act also granted feder- ally backed mortgage loan consumers that are experiencing financial hardship related to the COVID-19 pandemic the right to request six months of forbear- ance (with an option of six additional months), regardless of delinquency sta- tus. Congress prohibited servicers from charging any fees related to this forbear- ance. Mortgage delinquency status is frozen in place during forbearance, even if the bank suspends payments during the forbearance. As it stands today, cus- tomers can request forbearance under the CARES Act until the earlier of the end of 2020, or the end-date of the na- tional emergency concerning the novel coronavirus disease outbreak declared by the president on March 13, 2020, un - der the National Emergencies Act. State and Local-level Protection Many state and local authorities en- acted policies to protect mortgage bor- rowers and renters. The details of these state and local foreclosure bans vary. Banks should refer to the official websites for their state and local governments to assess the scope and requirements of continued on the next page