Legal Alert

Fannie Mae, Freddie Mac, and HUD Extend Foreclosure Moratorium and Take Other Actions

by the Mortgage Banking Group
May 15, 2020

On May 14, 2020, Fannie Mae in an update to Lender Letter 2020-02, Freddie Mac in Bulletin 2020-16, and the U.S. Department of Housing and Urban Development (HUD) in Mortgagee Letter 2020-13 extended their foreclosure moratoriums through June 30, 2020.

Fannie Mae and Freddie Mac halted foreclosure activities through May 17, 2020, in accordance with the CARES Act. HUD also previously announced a foreclosure moratorium for the same period.

In addition, Fannie Mae and Freddie Mac updated their property inspection guidance by advising that property inspections must not be completed when the borrower is experiencing a hardship related to COVID-19, unless as of March 1, 2020, (1) the mortgage loan was delinquent, and (2) the proper was confirmed to be vacant or abandoned. The agencies also changed the requirements for evaluating borrowers affected by COVID-19 for certain modifications by advising that the requirements apply if the borrower was current or fewer than 31 days delinquent as of March 1, 2020, instead of the previous March 13, 2020 date. Additionally, the agencies reminded servicers of the need to evaluate borrowers for the new COVID-19 Payment Deferral starting July 1, 2020.

HUD in Mortgagee Letter 2020-14 extended the effective date of the employment re-verification and appraisal guidance provided in Mortgagee Letter 2020-05 in view of COVID-19. Originally, the appraisal guidance was effective for appraisal inspections completed on or before May 17, 2020, and the employment re-verification guidance was effective for cases closed on or before May 17, 2020. Based on the extension, the appraisal guidance is now effective for appraisal inspections completed on or before June 30, 2020, and the employment re-verification guidance is effective for cases closed on or before June 30, 2020.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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