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COVID-19 & Homeowners
Currently, there are foreclosure stays under federal and Virginia law for homeowners impacted by COVID-19. Foreclosures are stayed for most federally-backed loans through July 31, 2021, with some Virginia protections extending to September 1, 2021. Forbearances are available upon request for homeowners with federally-backed loans; other homeowners will need to contact their servicer for relief options.
CARES Act Foreclosure Protections for Federally-Backed Loans
Section 4022 (15 U.S.C. 9056) of the Coronavirus Aid, Relief, and Economic Security, or CARES, Act created a foreclosure moratorium and a consumer's right to request a forbearance on their mortgage. These CARES Act protections are applicable only to federally-backed mortgage loans on one-family to four-family residential properties.
Federally-backed loans are loans:
- Purchased or securitized by the Federal Home Loan Mortgage Corporation, or Freddie Mac
- Purchased or securitized by the Federal National Mortgage Association, or Fannie Mae
- Guaranteed or insured by the Department of Veterans Affairs
- See the Veteran's Affairs assistance page here
- Guaranteed, insured or made by the Department of Agriculture
- Insured by the Federal Housing Administration (FHA) under title II of the National Housing Act
- Insured under section 255 of the National Housing Act (Home Equity Conversion Mortgages for Seniors, or HECMs)
- Guaranteed under section 1715z–13a (Indian home loan guarantees) or 1715z–13b (Native Hawaiian home loan guarantees) of title 12
Federal Foreclosure Stays
Section 4022(c)(2) (15 U.S.C. 9056(c)(2)) of the CARES Act created a foreclosure moratorium on federally-backed mortgage loans (excluding loans on vacant or abandoned properties) for not less than the 60-day period beginning on March 18, 2020. The foreclosure moratorium has been extended through July 31, 2021, with foreclosure-related evictions put on hold for most loans through September 30, 2021:
On June 24, 2021, the Federal Housing Finance Agency (FHFA) announced that it was extending the foreclosure moratorium on single-family mortgages backed by Fannie Mae and Freddie Mac until July 31, 2021. On July 30, 2021, the FHFA announced that it will be placing a moratorium on foreclosure-related evictions until September 30, 2021.
On June 24, 2021, the U.S. Department of Agriculture (USDA) Rural Development announced that it was extending its foreclosure moratorium for all single family housing direct and guaranteed home loans through July 31, 2021.
On June 30, 2021, the HUD Office of Public and Indian Housing announced that it was extending the foreclosure moratorium on Section 184 Indian Home Loan Guarantee program and Section 184A Native Hawaiian Housing Loan Guarantee program loans through July 31, 2021. On July 30, 2021, the Office announced that it will be placing a moratorium on foreclosure-related evictions until September 30, 2021.
On June 25, 2021, the Federal Housing Administration (FHA) announced that it was extending the foreclosure moratorium on FHA-insured Title II Single Family forward and Home Equity Conversion reverse mortgages (HECMs) through July 31, 2021. On July 30, 2021, the FHA announced that it will be placing a moratorium on foreclosure-related evictions until September 30, 2021.
On June 25, 2021, the Department of Veterans Affairs (VA) announced that it was extending the foreclosure moratorium on properties secured by VA-guaranteed loans through July 31, 2021. On July 30, 2021, the VA announced that it will be placing a moratorium on foreclosure-related evictions until September 30, 2021.
Foreclosure Stay Under Va. Code § 44-209
The Virginia legislature has also provided homeowners with some foreclosure protections by extending to them the protections of Va. Code § 44-209, which was created to give certain relief to government employees and contractors during federal government shutdowns.
House Bill 340 (Chapter 1202) states that the protections under the statute relating to a foreclosure proceeding on a mortgage or an execution of or sale under any deed of trust are also applicable to any homeowner affected by COVID-19 during the period for which the Governor has declared a state of emergency. Va. Code § 44-209(C) provides that any homeowner of a one-family to four-family residential property who defaults on a note secured by the property and is subject to a foreclosure proceeding is granted a 30-day stay of the foreclosure proceedings.
The homeowner must request the stay from their lender and provide written proof that they are not currently receiving wages or payments from a public or private source as a result of the COVID-19 situation. Written proof includes (i) a paystub showing zero dollars in earnings for a pay period within the period for which the Governor has declared the COVID-19 state of emergency, (ii) a copy of a furlough notification letter or essential employee status letter indicating the employee's status as nonessential due to the COVID-19 emergency, or (iii) any other documentation deemed appropriate by the lender.
This stay period is also tolled during the period of declared judicial emergency. See the Supreme Court of Virginia Orders of Judicial Emergency here.
These protections expire 90 days following the end of the state of emergency declared by the Governor, which Governor Northam let expire as of July 1, 2021. Note that homeowners are not protected under this statute if they are otherwise protected from foreclosure by another federal, state, or local law, regulation, or action enacted in response to the COVID-19 pandemic or the Governor's state of emergency.
Right to Request Forbearance on Federally-Backed Loans under CARES Act
A homeowner with a federally-backed loan experiencing a financial hardship due, directly or indirectly, to COVID-19 may request a forbearance on their loan, regardless of their delinquency status, by submitting a request for forbearance to their servicer and affirming that they are experiencing a COVID-19-related financial hardship. The servicer must provide the forbearance upon request and can't require any additional documentation other than the attestation.
Note that these forbearances are not automatic - the borrower must reach out to their servicer and request the forbearance. Some federally-backed mortgages have a December 31, 2020 deadline for requesting an initial forbearance.
- Be granted up to 180 days
- Extended for an additional period of up to 180 days on the homeowner's request
- Either period can be shortened on the homeowner's request
During the forbearance period, no fees, penalties or additional interest will accrue.
On February 25, 2021, the FHFA announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional forbearance extension of up to three months. Eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of February 28, 2021, and other limits may apply.
On February 16, 2021, the FHA announced that it was extending the date for mortgagees (the bank or mortgage financier) to approve FHA borrowers, impacted directly or indirectly by the COVID-19 pandemic, for an initial COVID-19 forbearance through June 30, 2021.
Other Mortgage Assistance Options
If your loan is not federally-backed, then it is not covered by the CARES Act and you will need to reach out to your servicer to see what options are available to you. Generally, all mortgage servicers are required under federal law to discuss mortgage relief programs and allow homeowners to apply to their programs if the homeowner has a financial hardship. Many servicers may offer additional programs due to COVID-19. Some may require proof of hardship.
Find out which relief you may qualify for with the Consumer Financial Protection Bureau’s guide here.
Find links below to some of the largest mortgage servicers' COVID-19 relief information pages:
- Fay Servicing
- Mr. Cooper
- PHH Mortgage/Ocwen
- PNC Bank
- Select Portfolio Servicing (SPS)
- Rushmore Loan Management Services
- Wells Fargo
If you are a Virginia Housing borrower, you can ask for a forbearance. Learn more here.
After Receiving a Forbearance
Homeowners who receive a forbearance under the CARES Act are not required to make a lump sum payment to repay their missed payments once the forbearance period ends. However, the CARES Act doesn't address how repayment will occur.
Whether or not your forbearance was granted under the CARES Act, you need to make arrangements with your servicer on how your missed payments will be repaid. Options will depend on what your servicer offers, but may include a repayment plan, additional months added to the end of the mortgage term, or a loan modification.
The Federal Housing Finance Agency (FHFA) announced that it would be making a new payment deferral option available to homeowners with a Fannie Mae or Freddie Mac loan in forbearance. The payment deferral option allows borrowers, who are able to return to making their normal monthly mortgage payment after forbearance, the ability to repay their missed payments at the time the home is sold, refinanced, or at loan maturity. On February 25, 2021, the FHFA announced that COVID-19 Payment Deferral for borrowers with an Enterprise-backed mortgage can now cover up to 18 months of missed payments. COVID-19 Payment Deferral allows those borrowers to repay their missed payments at the time the home is sold, refinanced, or at mortgage maturity.See more Fannie Mae repayment options here. See more Freddie Mac repayment options here.
For those trying to sell a home under a Fannie Mae or Freddie Mac forbearance, the FHFA extended its temporary policy allowing the purchase of qualified loans in forbearance until December 31, 2020. In addition, it also extended certain other COVID-related loan origination flexibilities until April 30, 2021.
See more about VA loan options after deferment here. The VA issued Circular 26-21-07 on March 26, 2021 (and updated it on June 3, 2021) regarding loan payment relief for VA borrowers affected by COVID-19, including an announcement for an upcoming temporary COVID-19 Veterans Assistance Partial Claim Payment program. On July 23, 2021, the VA announced the COVID-19 Refund Modification, a type of loan modification specific to those borrowers needing payment reductions when exiting COVID-19 forbearance, as well as the waterfall of home retention options for helping borrowers affected financially by the COVID-19 pandemic.
See the CARES Act Forbearance Fact Sheet for FHA, VA and USDA loans here.
See the Consumer Financial Protection Bureau's guide on what to do after you receive a forbearance here.
Other Helpful Links
- Stay Home Virginia's Resources for Homeowners page
- June 5, 2020 memo from Karl R. Hade, Executive Secretary of the Supreme Court of Virginia, to Active and Retired Circuit and General District Court Judges regarding unlawful detainers and writs of eviction.
- Consumer Financial Protection Bureau’s Coronavirus mortgage and housing assistance page
- Executive Order 13945 (August 8, 2020): Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners
Page created November 18, 2020. Last updated October 25, 2021.