Foreclosure and eviction moratoriums expiring

Guest blog by Megan Baumer

Federal moratoriums on evictions and foreclosures on federally backed mortgages are currently scheduled to end on July 31, 2021.  However, the White House held meetings with local officials from across the country on July 21st to discuss ways to keep people in their homes and to avoid a nationwide eviction crisis.  No new extension was announced following those meetings.

Evictions

30-day eviction notice is required for federally-backed properties – apparently even post-July 31. 

HUD/FHA and USDA will require landlords to provide tenants with 30 days notice to vacate for non-payment rent.  This will apply only if the landlord:

a.  has underlying financing

1)   backed by the federal government, or

2)   purchased or securitized by the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae), or

b.  is receiving assistance from the federal government.

While a landlord is receiving mortgage relief, they can’t evict tenants for unpaid rent or late fees or charge tenants late fees or other penalties due to paying rent late.  When a landlord stops receiving mortgage forbearance relief, they must give tenants at least 30 days’ notice to vacate.

Emergency Rental Assistance

There should still be funds available for rental assistance under the American Rescue Plan, which allocated $21.5 billion for Emergency Rental Assistance (ERA).  When combined with the $25 billion allocated by the Consolidated Appropriations Act 2021, the total ERA is more than $46 billion. 

In late June, the White House called for an acceleration of the ERA funds to renters and landlords.  A major problem is that no national infrastructure is in place to disburse the aid, so the states use various agencies and non-profits to disburse the funds. CNBC reported on July 13th that the first $25 billion has been disbursed to the states.   However, the Washington Post reported on July 14th that only $1.5 billion of that money has been used by the states for rent, utilities and arrears through the end of May.  Only about $8.6 billion of the second ($21.5 billion) round has been disbursed to the states.  About 176,000 households have been assisted, but some 11.5 million or 16% of adult renters are behind on their rent.  Meanwhile, rents are rising and housing prices are skyrocketing.

Texas has done better than many states – disbursing  $336 million of $1.1 billion the federal government provided by June 17th, with nearly $18 million going to renters and landlords every day.  (Route Fifty – June 22, 2021).

Locally, on June 10, the Austin City Council approved items to provide $42 million in rental assistance to keep Austin families from being evicted.  The $42 million is made up of about $35 million in federal funding from the American Rescue Plan and about $7 million in local funds.  Rent payments are made directly to the landlord/property manager/property owner who is owed rent payments.  It looks like either the landlord or the tenant may apply. 

For applications and other information, go to: 

Austin residents:  Austintexas.gov/rent –  RENT (Relief of Emergency Needs for Tenants)

Travis county:  https://traviscounty.onlinepha.com/en-US/

Williamson County, not Austin: http://cityofthrall.com/Wilco%20Forward%20Ph%20III%20Flyer_English.pdf

(This flier refers to payments made from March – December, so it is not current, but the listed contacts are probably the same if funds are still available.)

Also check out Check the Consumer Financial Protection Bureaus general information about assistance programs to homeowners, landlords and tenants at:

https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/

Foreclosures

Even after the foreclosure moratorium ends on July 31, most mortgage companies cannot start the foreclosure process before January 1, 2022, unless they have reached out to the homeowner or evaluated a homeowner’s complete application for options to help avoid foreclosure. 

On June 25, 2021, HUD announced:

1.  FHA is continuing its extension of the deadline for first legal action and reasonable diligence timeframes for 180 days after July 31, 2021 (which means through January 2022). This extension excludes vacant or abandoned properties.

2. New forbearance.  Homeowners who have not previously been in COVID-19 forbearance have until September 30, 2021 to request a forbearance.  The COVID-19 Forbearance for homeowners who request forbearance assistance for the 1st time between July 1, 2021, and September 30, 2021, is for six months.

3.  Extension of forbearance.  For homeowners who received a forbearance from their mortgage servicer between July 1, 2020, and September 30, 2020, FHA is providing one additional three- month forbearance extension for those who need and request one.

4,  A  new COVID-19 Advance Loan Modification (COVID-19 ALM) for borrowers currently 90 or more days delinquent or at the end of their COVID-19 Forbearance.  For homeowners who qualify with a 30-year rate and term, the modification will bring the mortgage current and will reduce the principal and interest portion of their monthly mortgage payment by at least 25 %.  Mortgage servicers must offer the new COVID-19 ALM to distressed homeowners with FHA-insured mortgages who have faced a COVID-19 related hardship.

5.  For seniors with Home Equity Conversion (reverse) Mortgages (HECMs) who have been negatively affected by COVID-19, extension requests, servicers must grant homeowners an extension of up to six months before the servicer may call the loan due and payable, if the extension request is received between July 1, 2021, and September 30, 2021.  If the HECM loans has already been called due and payable, servicers must approve homeowner requests for an extension for any deadline related to foreclosure and claim submission of up to six months when the request is received between July 1, 2021, and September 30, 2021.

For more information, go to:

https://www.hud.gov/press/press_releases_media_advisories/HUD_No_21_108

Since FHA, VA, and USDA seem to be working in tandem, these extensions probably apply to those loans as well. 

https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/

Go to this site for information about how to file a compliant against your mortgage company if you think you have grounds for one.  CFPB will forward the complaint to your lender and work to get you a response, generally within 15 days.  Consumerfinance.gov. CFPB – June 28, 2021

Property Taxes:  The City of Austin’s website says the Travis County tax office temporarily suspended new legal actions against those with delinquent property taxes.  The website does not say when this temporary suspension will end.  I found this information still up on 7/12/21.  However, we had some clients whose property tax liens were set for foreclosure on July 6, 2021.  These cases were not new actions to collect but actions filed before the Covid shut downs – that were not being set for foreclosure.  

https://tax-office.traviscountytx.gov/about-us/newsroom/2020/183-tax-office-temporarily-suspends-legal-actions

Additional sources:

https://www.cnbc.com/2021/07/13/eviction-ban-about-to-expire-little-assistance-reaches-renters-.html

https://www.washingtonpost.com/us-policy/2021/07/14/eviction-prevention-white-house-moratorium/

https://www.route-fifty.com/health-human-services/2021/06/why-states-have-been-slow-paying-out-billions-federal-rental-aid/174864/

Megan Baumer

Baumerlaw@baumerlaw.com

https://www.facebook.com/BaumerLaw

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by Michael Baumer