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What Does the FHFA Moratorium Extension Mean for Residential Real Estate Investors?


[Updated: Dec 03, 2020] Dec 03, 2020 by Marc Rapport
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The national moratorium on evictions and foreclosures has been extended again, kicking the can down the road for what may be an inevitable reckoning for millions of homeowners. It could ramp up the pressure on a lot of landlords just hanging on, too.

The Federal Housing Finance Agency (FHFA) announced Wednesday that it has extended until "at least" Jan. 31 moratoriums on single-family foreclosures and real estate-owned (REO) evictions for residents of properties financed by Fannie Mae or Freddie Mac and the 11 Federal Home Loan Banks.

The FHFA says it's extending the protections "to help borrowers at risk of losing their home due to the coronavirus national emergency" and says the foreclosure moratorium applies to GSE-backed, single-family mortgages only. The agency says the REO eviction moratorium applies to properties that have been acquired by a GSE through foreclosure or deed in lieu of foreclosure transactions.

Giving peace of mind to more than 28 million homeowners

"This extension gives peace of mind to the more than 28 million homeowners with an Enterprise-backed mortgage," FHFA Director Mark Calabria says. Here is a joint website that contains more information about the various mortgage forbearance and moratorium protections in place on the federal level.

Those protections include FHFA-imposed mortgage forbearances and an eviction moratorium from the Centers for Disease Control, among others, and have been regularly extended since COVID-19 first began killing Americans by the thousands and paralyzed much of the economy this spring.

Many of these protections are due to expire on Dec. 31, but with the plague's drastic surge it seems reasonable to expect that the FHFA move this week is just one of more to come, and that all these protections may well remain in place until widespread vaccinations have their effect.

So, what does this mean to residential real estate investors in this red-hot market?

The Millionacres bottom line

Well, forbearances have held down foreclosures, and even though they've leveled off in the past several weeks, there are still a few million of them. If they turn into foreclosures, that could put a lot of housing on the market, if not at bargain-basement prices -- as in the housing crash of the Great Recession -- then at least to manageable levels for alert investors.

As a counterbalance to that, however, it seems reasonable to think that the continuing moratoriums on rental evictions -- where they exist and are enforced -- might force hard-pressed landlords, most likely small operators, to go ahead and sell. And if they're forced to evict millions of people if and when the moratoriums do expire, that, too, could convulse the housing market.

So much of this depends on what Congress does as well as the individual market you're considering, since each has its own mix of employers and unemployment, businesses open and shuttered, and owned and rented housing inventory.

But until the pandemic fades into memory, all this uncertainty will continue. Of that, we can be certain.

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