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Attention New York Homeowners: Foreclosure Moratorium for FHFA and FHA Loans Are Extended Until the End of 2020

by Sofia Colosimo and K. Scott Kohanowski, Esq. September 8, 2020

On August 27th, the Federal Housing Finance Agency (FHFA) and the US Department of Housing and Urban Development (HUD) announced an extension of the foreclosure moratoria in place for homeowners with mortgages backed by Government Sponsored Enterprises (GSEs) such as Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA) until at least December 31st, 2020. This announcement comes just four days before the previous moratoria were set to expire. As the COVID-19 pandemic continues to impact homeowners and tenants, many of whom have gone months without regular income, this extension offers much needed relief to more than 28 million homeowners with GSE-backed mortgages and nearly 8 million homeowners with FHA-insured mortgages.

The newly extended foreclosure moratoria suspend all foreclosure actions, including the initiation of any judicial or non-judicial foreclosure process, foreclosure sales, and moves for foreclosure judgment or order of sale. For borrowers who continue to deal with a loss of income or who have recently lost a loved one due to the pandemic, the moratoria will offer them an additional four months to work with their mortgage servicers and find a solution to stay in their homes.

Homeowners with a Fannie Mae, Freddie Mac or FHA-insured mortgage who are struggling to keep up, or are already behind on their mortgage payments, may be eligible for a forbearance which will “pause” their monthly payments for up to 12 months. Borrowers should be aware that these payments are not forgiven, they will eventually be required to pay back all deferred payments. Under the CARES Act, borrowers will not be required to repay the deferred payments as one lump sum at the end of the forbearance period, however, they should work directly with their servicer to determine how and when those payments will be due. Before the forbearance period has ended, the servicer should reach out to the borrower to discuss any options to bring the loan current. Borrowers can check whether their loan is backed by Fannie Mae or Freddie Mac by using the agencies’ loan lookup tools and confirm whether their loan is FHA-insured by reviewing their loan documents and mortgage statements.

For many homeowners in New York City, the pandemic has affected their tenants’ ability to pay rent as they face job and income insecurity. Loss of rental income can make it impossible for borrowers to afford their monthly mortgage payments. In addition to requesting a forbearance or other loss mitigation options, homeowners with tenants can seek assistance to work together to avoid eviction and foreclosure.

The New York Peace Institute recently announced the launch of their Landlord-Tenant Mediation Project, which aims to “address rent-related and other housing issues in a mediation setting outside of the housing court system, with a focus on neighborhoods most impacted by the COVID-19 pandemic”. Mediation is generally an out-of-court process where a neutral third person helps the parties discuss and try to resolve the dispute. The landlord and tenant will have the opportunity to describe the issues, discuss their interests, understandings, and feelings, provide each other with information, and explore ideas for a resolution. The process remains “voluntary” in that the parties are not required to come to agreement, but the mediator can facilitate finding a resolution that is mutually acceptable without having to go to court.

To learn more about the financial resources available to homeowners, read our COVID-19 Financial Resource Guide. If you are a New York City homeowner who has been affected by COVID-19 or are having difficulty making monthly mortgage or other housing payments, please contact the Homeowner Stability Project at 212-382- 6766.

Scott Kohanowski, Esq. is the Director of the Homeowner Stability and LGBT Advocacy Projects. Sofia Colosimo is the Project Coordinator of the Projects.

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