The Eviction and Foreclosure Moratoria – what the new update means and how it impacts residents

At its most basic definition, foreclosure is a legal process that allows lenders to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. When a borrower signs a mortgage loan agreement, they’re giving the lender the right to foreclose the home should they fail to uphold the terms of the mortgage document, such as missing multiple mortgage payments. Although staying on top of mortgage payments is important, unexpected loss of income can make it difficult to avoid foreclosure.

 

Due to complications of COVID-19, many Americans have experienced this unexpected loss of income, and have also had continued difficulty finding another job. In response to this, the government issued an order to halt all evictions. The halt initially started in September 2020 and was extended to end in July of this year, but President Biden recently proposed an extension specifically for the areas in which transmission was rapidly increasing. However, the Supreme Court denied the moratorium extension on August 26 and announced that evictions would resume, even in the areas with soaring rates of virus transmission. So, what does that mean for homeowners?

 

What’s the difference?

The first thing that homeowners need to understand is the difference between the current CDC guidance on evictions and the Supreme Court decision. The initial eviction moratorium issued by the CDC was backed by a presidential order that made it legally binding. The same order was extended to July 2021 through congressional voting. However, the CDC’s most recent moratorium acts simply as a suggestion, because, while the CDC does have some legal authority, they do not have the power to extend the eviction moratorium without congressional, presidential, or Supreme Court approval. 

 

What does this mean for foreclosure?

The second thing that homeowners need to understand is what the recent Supreme Court decision means for foreclosure. In the initial eviction moratorium, qualifying homeowners were protected from foreclosure to a certain extent. Although this protection has now ended, several federal agencies such as the HUD, USDA and VA announced additional measures to help qualifying individuals pay their mortgage, thus avoiding foreclosure. The end dates of these protections vary by agency. However, the federal government has also allocated nearly $10 billion to the Homeowner Assistance Fund, which provides states with funding to help homeowners catch up on overdue payments to avoid foreclosure. Most states, including Tennessee, will start accepting applications for these funds in the fall of 2021. 

  

What now?

United Housing understands that waiting for state and federal aid may not be an option for people who are close to foreclosure. If foreclosure is inevitable, it’s important to seek help as soon as possible to minimize any consequences. You can contact your lender or local organizations like United Housing to find out about mortgage assistance options. In fact, most mortgage lenders want to help you avoid complete foreclosure, and are often willing to give you options even after multiple missed payments. United Housing also offers COVID-19 mortgage assistance for qualifying individuals. This program is a great way to prevent foreclosure while awaiting state or federal funds. 

 

If you or a loved one is experiencing foreclosure, United Housing is here to help. UHI offers several options to either prevent foreclosure from happening, or getting you through it when it does. From our homebuyer education courses that address important topics like credit and foreclosure, to our post purchase educational class that teaches mortgage budgeting, we also offer access to HUD-certified counselors that can address your specific situations. To learn more about United Housing’s resources, call us today at (901) 272-1122.

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