Homeowners facing foreclosure can now stall proceedings while waiting to receive federal aid.
The Federal Housing Agency (FHA) announced that Freddie Mac and Fannie will require servicers to suspend foreclosure activities for up to 60 days if the servicer has been informed that the borrower applied for assistance through the Homeowner Assistance Fund.
“FHFA is committed to sustainable homeownership. Today’s action will provide borrowers who need temporary mortgage assistance with additional time to be evaluated for relief through their state’s approved Homeownership Assistance Fund,” said FHFA Acting Director Sandra L. Thompson.
The move is meant to help homeowners on the brink of foreclosure who may still be struggling to make on-time payments. The HAF provides up to $9.96 billion for states, territories, and tribal entities to provide relief for homeowners, and is administered by the Department of the Treasury.
Foreclosures are on the rise now that many pandemic-driven moratoriums have been lifted. February filings were up 129% YOY and 11% from January.
“February foreclosure activity looks a lot like what we can expect to see for at least the next six months – double digit month-over-month growth, and triple digit year-over-year increases,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company.
“This isn’t an indication of economic turmoil, or of weakness in the housing market; it’s simply the gradual return to normal levels of foreclosure activity after two years of artificially low numbers due to government and industry efforts to protect financially-impacted homeowners from defaulting.”
Filings are expected to keep rising this year but to remain below historic levels in 2022.