FHFA extends coronavirus relief measures through September

Mortgage lenders will be able to sell loans in forbearance to the government-sponsored enterprises and get some leeway from the GSEs that facilitate remote origination operations for at least another month.

Many mortgage companies are hoping to operate remotely through Dec. 31 and asking regulators for relief to that end. While the extension of the Aug. 31 deadline to Sept. 30 falls short of that goal, it's consistent with a monthly re-evaluation of the policies that leaves the door open for future extensions.

Thanks largely to allowances for remote processing, as well as federal monetary policy stimulus that has lowered mortgage rates, originations have been strong during the pandemic, but servicing operations have faced challenges.

On Thursday, the Federal Housing Finance Agency and Federal Housing Administration announced that they would extend their eviction and foreclosure bans until the end of the year. The two agencies respectively buy or insure the bulk of loans in the U.S. mortgage market. The FHA also has temporary policies that accommodate processing flexibilities and newly originated loans that end up going into forbearance.

The eviction and foreclosure bans, and combined with federal forbearance mandates applicable to government-related loans, are pushing back normal servicing timelines considerably, but may ultimately be reducing the number of borrowers that have to go into foreclosure if federal relief efforts are effective.

Typically, unpaid loans start the foreclosure process after a few months, but the process can take several more months or even years to complete, depending on the state.

The outcome of federal elections could play a big role in what foreclosure processing timelines look like, with a Biden administration being more likely to add steps aimed at consumer protection that could delay the process, but improve the odds of keeping a paying borrower in the home.