With the end of the first 12-month CARES Act forbearance periods fast approaching, President Biden extended borrower payment protections for federally backed mortgages.
The administration pushed both the forbearance enrollment deadline and the foreclosure moratorium on FHA, VA and USDA loans by three months to June 30, 2021. Borrowers who entered forbearance prior to June 30, 2020, will be allotted an additional six months of coverage in three-month increments.
The announcement comes
Forbearance plan exits
The Mortgage Bankers Association welcomed the extension, believing it necessary for borrowers and servicers alike. However, the measures could have negative ripple effects on housing inventory, potentially keeping hundreds of thousands and maybe millions of properties off the market that’s starving for inventory, Tim Rood,
“The real fear I have is in an effort to be overly charitable — and we need to be charitable — that we’ll try to extend and pretend a way through this problem,” Rood said. “The risk is you create a zombie housing market with no transparency into who's making their payments and how much shadow inventory is out there. That tends to weigh on investors’ minds.”