Foreclosure Moratorium – December 2020 Update

So there is plenty of bad news these days, but we are starting to see some good news, right? Like the most recent news about the government foreclosure moratorium.

On a personal note, we have a Covid exposure scare.  Our youngest son’s girlfriend came into contact with someone who tested (falsely) positive.  It took a week or so to figure out that it was a false positive and that no one was actually infected, but we had to quarantine from our son.  Thanksgiving dinner was eaten in two rooms, with him in a separate room eating alone.

Not fun.

We will be having a Thanksgiving ‘redo’ though, next week.  So that is good.

But on the bigger picture, we have potential vaccines on the horizon.  That’s one good thing, but we still have to hunker down and ride this out for a while longer.

Foreclosure Moratorium Update

On that front, the FHA has just announced that they are going to extend the mortgage foreclosure commencement moratorium again, this time through January 31, 2021.  It might get extended again after that – I think it probably will – but at the very least people who were worried about what might happen right after the holidays can take a little bit of a breather anyway.

And everyone needs a bit of a breather.

But what does the FHA moratorium extension mean?  How am I (someone reading this post) supposed to know what that means to me?

It’s complicated, but here are the basics:

Types of Mortgages

There are three types of mortgages:

  1. The mortgages that are owned by the government (Freddie Mac, Fannie Mae, Ginnie Mac and FHA) – I will show you how to find out if yours is a government backed loan at the end of the post, so keep reading.
  2. Mortgages that are owned by the big banks (Wells Fargo, Bank of America, Chase, etc.)
  3. And the mortgages that are owned by mortgage servicers and those that are owned by hedge funds and investment banks.

Government Backed Mortgages

The FHA mortgage foreclosure moratorium absolutely applies to government owned (also known as government backed) mortgage loans.  Everyone who has a government backed mortgage loan and is worried about the start of next year … there is plenty to worry about these days but nothing will happen until the moratorium is lifted.

I tend to think, in fact I strongly suspect, that the moratorium is going to be extended through June 2021, but there is no guarantee.  It does keep getting extended, though, and now you can rest easy that no bank will file a foreclosure complaint against you if you have a government backed mortgage loan.

Big Bank Mortgages

The mortgage loans owned by the big banks, the Wells Fargo’s of the world … Governor Murphy and other governors really leaned hard on them back at the start of the pandemic.  Most of those banks have agreed to put a ‘voluntary hold’ on foreclosure filings for as long as the federal government foreclosure moratorium is in place.

The thing is, they are losing money hand over foot here (Good!) and are under some pressure to stop playing ball.  The general thinking amongst the attorneys in New Jersey involved in foreclosure litigation is that most of the big banks will continue to hold off on starting new foreclosure cases until the moratorium is lifted.

Hedge Fund, Investment Bank and Mortgage Servicer Mortgages

The third group of mortgage loans, though, are different.  These companies have no branch offices and do not have a presence in the world in a manner that they care one whit about consumers or consumer complaints.  It is not their business model at all.

These companies have also decided to wait things out and match the moratorium. However, the word on the street is that they are no longer going to play ball.  They don’t have to continue to wait and they just don’t care about public perception of their businesses.

But wait! This still doesn’t help me. Which type of mortgage owner do I have?

Good question.  Glad I thought of it.

Sometimes it is pretty easy to tell.  If your mortgage servicer is Bank of America, for example, you are almost certainly going to be protected by this continued moratorium.

If you want to know if your mortgage is a Fannie Mae or Freddie Mac mortgage, you can check yourself very easily by checking here and here.

It should take you a total of 40 seconds to check both government mortgage owners.

If you don’t find your loan after either search and you want some help figuring out where your loan is held, www.consumerfinance.gov is a good resource.  People in my office can also help you if you want to, you know … talk to a human?

Well, I am glad to be able to give you all some good news this weekend.  Goodness knows we all could use it.

I’ve been posting real stories of real cases on my Facebook account.  Many of them have been cautionary tales, but I am going to post a good story, full of good news and humor, with a happy result.  Keep any eye out for that this week.  There are happy foreclosure stories, and I have a good one for you.

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