by Maurie Backman | Feb. 1, 2021
Homeowners are getting another lifeline during the pandemic.
Millions of Americans have struggled to make ends meet in the course of the coronavirus pandemic. Thankfully, there's been relief for homeowners who have fallen behind on their mortgage payments, and that relief just got extended a little longer.
The Department of U.S. Housing and Urban Development (HUD) has implemented President Joe Biden's request to extend eviction and foreclosure moratoriums on single family homes through March 31. This means lenders cannot pursue foreclosures against borrowers who fell delinquent on their mortgage payments, even prior to the pandemic.
Previously, the ban on foreclosures and evictions was set to last until Feb. 28. But given the state of the pandemic as well as the economy, it's clear that homeowners need relief for more than just another month. This latest extension could help keep countless mortgage borrowers in their homes.
A ban on evictions and foreclosures isn't the only form of relief that's been available to homeowners during the pandemic. Mortgage borrowers also have the option to request that their lenders put their loans into forbearance for up to 360 days. During that time, mortgage payments are paused, and aren't counted as delinquent. Following those 360 days, borrowers have to catch up on missed payments, but lenders cannot demand a lump sum.
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But while foreclosure and eviction bans and forbearance are helpful measures, they may not ultimately keep struggling borrowers in their homes. At some point, those protections will expire. If that comes when borrowers' circumstances haven't improved, those same people will, unfortunately, risk losing their homes.
One silver lining throughout this mess is that home values have risen on a national level. Low mortgage rates have fueled a surge in buyer demand that's driven home prices up, so some borrowers who can't pay their home loans once protections end may be able to sell their properties for enough to satisfy their mortgage obligations. Those who don't can pursue short sales with their lenders -- but short sales, like foreclosure, can show up on a borrower's credit report for many years.
Biden is currently pushing a $1.9 trillion coronavirus relief package that includes a round of $1,400 stimulus checks. Those payments could help many borrowers catch up on missed mortgage payments. Some lawmakers insist that any follow-up round of stimulus checks be targeted to recipients who need the money most -- but mortgage borrowers who are delinquent, or on the verge of delinquency, could easily fall into that category.
There's also a strong chance mortgage lenders will work with borrowers who need help once the aforementioned protections expire. Some homeowners may be able to modify their loans, or even refinance to lower their monthly payments.
But the big question remains: Will mortgage borrowers get enough aid? Or will there be a wave of foreclosures once homeowner protections wrap up for good?
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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