“Immediately safeguarding borrowers with HUD-insured or guaranteed mortgages is an important first step in tackling larger, systemic housing challenges that must be overcome,” said Acting Federal Housing Commissioner Janet Golrick.
The moratorium prohibits initiating or proceeding with foreclosure and foreclosure-related evictions for HUD-insured or guaranteed single-family forward and reverse mortgages, except for those secured by legally vacant and abandoned properties.
Mortgage companies are required to provide up to six months of forbearance when a borrower experiencing a financial hardship due to COVID-19 requests this assistance and up to an additional six months for a borrower who requests an extension of the initial forbearance.
The concern is what will happen to struggling homeowners once the moratorium expires.
“There is a backlog of foreclosures building up — loans that were in foreclosure prior to the moratoria, loans that would have defaulted under normal circumstances and loans whose borrowers are in financial distress due to the pandemic,” Sharga said. “While it’s still highly unlikely that we’ll see another wave of foreclosures like the one we had during the Great Recession, we really won’t know how big that backlog is until after the government programs expire.”
The Tucson area has been on a steady recovery from foreclosures since 2012 when numbers started to drop dramatically after reaching a high in March 2011 when 791 homes went into foreclosure that month alone.