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Federal Foreclosure and Eviction Moratorium Ending: Help for Homeowners

Posted by benjamen.harper@gmail.com on July 22, 2021
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Foreclosure

With the approaching end of the Federal Foreclosure and Eviction Moratorium, many homeowners are in a situation that presents financially insurmountable problems. Nationwide, more than 1.8 million families are at least 90 days delinquent on paying their mortgages. Given the significant monthly payments that most mortgagees are obligated to pay, this could mean a cash payment of up to ten thousand dollars may be required to keep your home.

There are some programs which are available to assist delinquent homeowners.

COVID-19 Advance Loan Modification

A new program called the COVID-19 Advance Loan Modification will be available to borrowers who are 90 or more days delinquent or are at the end of their COVID-19 forbearance. This 30-year rate-and-term mortgage modification will bring the homeowner’s mortgage loan to “current” status and reduce the principal and interest portion of their monthly mortgage payment by at least 25%. It is a very useful tool with long-term benefits for homeowners.

Mortgage servicers will have to offer the new ALM to homeowners with FHA-insured mortgages who have faced pandemic-related financial hardship. In order to accept the modification, homeowners will only need to sign the mortgage modification documents and return them to their mortgage servicer.

Home Equity Conversion Mortgage COVID-19 Extension Avoiding Federal Foreclosure and Eviction Moratorium

Seniors with a home-equity conversion mortgage — also known as a reverse mortgage — who have faced financial hardship during the pandemic can request a six-month extension to delay foreclosure-related deadlines, including those calling their loan due and payable, imposed by loan servicers. Servicers must approve extension requests received after July 1 and before September 30, the FHA states. Seniors who received an extension between July 1, 2020 and Sept. 30, 2020 are entitled to an additional three-month extension, if needed, when they make the request to their servicer.

If Your Home Goes Into Foreclosure, Hawaii Elite Real Estate Can Help You Sell It

You can sell your home up until it is sold at auction or the bank takes possession of your house. During this period of time, the home is considered to be in “pre-foreclosure” and you can try to settle your debts with the lender.

One way to avoid Federal Foreclosure and Eviction Moratorium deadline is to sell your home (with the help of an experienced agent) and net enough to pay off everything you owe the lender, including back mortgage payments, penalties, and fees. You won’t own your house anymore, but you won’t have the house foreclosed upon, which would do serious damage to your credit.

If you decide to sell, tell your lender that you plan to list the property for sale with the intention of paying off the mortgage. Ask the lender to postpone a foreclosure auction or sale and give you a chance to find a buyer.

Of course, making the decision to sell sooner than later will take some of the pressure off the deal and allow you more time to get the best price for the property. Make sure you ask the lender how long you have before the property will go on the auction block. It all depends on which state you live in. In some states, a lender can auction off a property in less than a month; in others, lenders can’t auction off a home for more than a year.

If you are a homeowner facing foreclosure, call us at Hawaii Elite Real Estate to discuss options available to you to keep or sell your property.

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