In recent mortgage letters sent out by the United States Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA) has extended the foreclosure and eviction moratorium for single-family FHA-insured mortgages through the early months of 2021. This decision provides much-needed assistance for many families across the country suffering financially from the impacts of COVID-19. Here, the qualified bankruptcy attorneys at Grossbart, Portney & Rosenberg, P.A. discuss how this decision will affect those considering filing for bankruptcy, and benefit those who may currently be in the bankruptcy process.
Understanding Extended Moratoria & Forbearance Procedures for Homeowners
For those struggling to continuously make their mortgage payments since the onset of the coronavirus pandemic, there have been many initiatives set forth by government agencies, including HUD and the FHA to provide financial relief to homeowners. As we enter this new year, the decision to extend moratoria and forbearance is one that will have a significant impact in the first few months of 2021. A forbearance agreement is an agreement arranged between you and your mortgage lender to provide temporary relief from paying your mortgage for an allotted period of time by lowering or pausing payments entirely.
This decision is the fourth extension of the FHA’s eviction and foreclosure moratorium and prohibits creditors from initiating foreclosure-related eviction proceedings for those in single-family forward and reverse mortgages through February 28, 2021. Additionally, provisions for self-employment, rental income, re-verification of income and exterior-only appraisals have been extended until this date as well. Finally, proof of endorsement for a single-family FHA loan in which the borrower has been granted COVID-19 forbearance has been extended until March 31, 2021. Essentially, these extensions provide relief to families and individuals as they navigate their finances and discuss options related to homeownership and potential foreclosure.
COVID-19 Forbearance and Its Impact on Bankruptcy
Forbearance in relation to COVID-19 has had a direct impact on the real estate market and homeowners’ financial responsibilities in the midst of the pandemic. Not only were additional moratorium periods enacted, but the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided additional relief options and adjustments to many bankruptcy cases. One of the largest changes that occurred during this time was the extended forbearance period, in which mortgage servicers must provide up to six months of forbearance when a borrower requests assistance after they have been financially affected by COVID-19. With the February 28, 2021 due date, borrowers are able to request an additional six-month extension to this forbearance. While this is a temporary fix, it is important to note that forbearance does not equal forgiveness. When the forbearance period ends, a homeowner will still have to eventually repay their missed mortgage payments during this time.
Planning for After Your Forbearance Period Ends
While it is something that many individuals do not even want to think about right now, the time will eventually come for you to repay your mortgage payments that were previously deferred. However, there are multiple options available for borrowers, including intermittent payments between a year-long time span and lengthening or modification of your current loan. If you are unable to make your mortgage payments after this time, consider discussing your bankruptcy options with a team of experienced professionals, such as those at Grossbart, Portney & Rosenberg, P.A. Chapter 13 bankruptcy may be a feasible option for those unable to pay back their debts upfront, in which they can enter an extended repayment period while making current payments on their mortgage.
Speak With Bankruptcy Attorneys at Grossbart, Portney & Rosenberg, P.A. Today
We understand that this time has been extremely difficult, both personally and financially for many. The coronavirus pandemic has brought unexpected changes that often feel like an endless cycle of concern and frustration. With the recent extension of forbearance presented by the FHA, borrowers will be able to see continued relief if they abide by the February 28, 2021 due date for assistance. However, after this extended forbearance period is over, it is important to plan proactively for your repayment strategy, and seek assistance if needed. To see how the Maryland bankruptcy attorneys at Grossbart, Portney & Rosenberg, P.A. can assist you, click here.