Fannie Mae and Freddie Mac will extend the moratoria on foreclosures and evictions until “at least” Jan. 31, the Federal Housing Finance Agency announced Wednesday.
“Extending Fannie Mae and Freddie Mac’s foreclosure and eviction moratoriums through January 2021 keeps borrowers safe during the pandemic," said Director Mark Calabria. “This extension gives peace of mind to the more than 28 million homeowners with an Enterprise-backed mortgage.”
The foreclosure moratorium applies only to single-family mortgages that are backed by one of the GSEs. The eviction moratorium pertains to properties acquired by either of the GSEs via foreclosure or deed-in-lieu of foreclosure transactions.
The FHFA estimates that the two agencies will shoulder costs of between $1.1 billion and $1.7 billion as a result of the extensions. That’s in addition to the $6 billion already incurred due to the moratoria that began shortly after the onset of the pandemic.
While Calabria characterized the extension as a necessary move, the measure has at least one critic in Richard Kruse, a partner at foreclosure auction house, Gryphon USA. Kruse argues that the extension “just delays inevitable pain.
“Continuing with the moratoriums indefinitely,” Kruse added, “will significantly disrupt future economic performances as home payoff and credit card balances grow, leading to more debt issues and bankruptcy increases.”
The amount of foreclosures has remained low thanks to the FHFA’s measures, but they are increasing. In October, there were just
Rick Sharga, executive vice president at Attom Data company RealtyTrac, credited a larger increase in distressed mortgages to zombie properties that predated the pandemic, and homes that were already in stages of default.
Auctions of