Pub. 10 2020 Issue 3

12 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. 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 pro- ceedings against homeowners with federally backed mortgage loans. The CARES Act’s mortgage foreclosure moratorium applied to single-family residential mortgage loans secured, guaranteed, or made by FHA, USDA, VA, or Fannie Mae or Freddie Mac. Originally scheduled to expire at the end of June, the various agencies extended the moratorium on foreclosures and evictions until at least Aug. 31, 2020. The CARES Act also granted Federally backed mortgage loan consumers expe- riencing financial hardship related to the COVID-19 pandemic, the right to request six months of forbearance (with an option of six additional months), regardless of delinquency status. Congress prohibited ser- vicers from charging any fees related to this forbearance. Mortgage delinquency status By Chris Bell, Associate General Counsel, Compliance Alliance