Mortgage Lenders Fannie Mae, and Freddie Mac To Suspend Foreclosures Through April
Mortgage lenders Fannie Mae and Freddie Mac will suspend foreclosures and evictions for at least 60 days as federal and business leaders respond to the growing COVID-19 crisis that will cost people their jobs and likely tip the economy into a recession. In a statement Wednesday, the Federal Housing Finance Agency said the suspension by the mortgage giants applies to homeowners with a single-family mortgage, backed by either company. “This foreclosure and eviction suspension allows homeowners with an Enterprise-backed mortgage to stay in their homes during this national emergency,” said FHFA Director Mark Calabria in a statement. The agency announced earlier this month Fannie Mae and Freddie Mac would offer payment forbearance – the option to suspend mortgage payments – because of hardship related to the pandemic. Earlier Wednesday, President Donald Trump announced the Department of Housing and Urban Development would suspend foreclosures and evictions through the end of April 2020. [as reported in Credit & Collection e-newsletter of 3/19/20] Comment by The Bankruptcy Law Firm, PC: “Forbearance” means borrower/homeowner does not have to pay the monthly mortgage payments as they come due, for the period of time the “forbearance” is in effect. It does NOT mean those monthly mortgage payments are forgiven, by the mortgage lender, so the borrower/homeowner never has to pay those mortgage payments. Instead, the unpaid monthly mortgage payments add up, increasing the total amount owed. When the forbearance ends, the borrower/homeowner may discover the borrower/homeowner is so far behind that the borrower/homeowner cannot catch up, with the result that the borrower/homeowner may have to file Chapter 13 bankruptcy (if eligible and feasible) to try to pay off the arrearage over a maximum 60 months Chapter 13 bankruptcy plan, or if paying off the arrearage in Chapter 13 is not feasible (or if borrower/homeowner is not eligible for Chapter 13), the borrower/homeowner can end up losing the house to foreclosure by the mortgage lender, at a later date.