FHFA extends foreclosure and eviction protection into 2021: What hopeful homebuyers need to know

Posted: 3 December 2020 11:12 am
News
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If you’ve been waiting for prices to drop before buying a home, you’ll likely be waiting at least a bit longer.

The Federal Housing Finance Agency (FHFA) announced Wednesday that borrowers at risk of losing their housing due to the pandemic would be able to stay in their homes until January 31, 2021, without fear of facing eviction or foreclosure. Previously, these protections were set to expire at the end of December.

Why was the moratorium extended?

The CDC initially ordered the moratorium on September 1st to prevent the further spread of the coronavirus. Wednesday’s extension comes as the number of new cases is spiking in many areas of the country and the lack of a second stimulus package means many Americans are still having trouble making ends meet. The extension will allow more renters and homeowners to remain where they are for at least one more month.

Who qualifies for these protections?

The moratorium and the extension apply to landlords and homeowners with single-family mortgages that are backed by either the federal government or government-sponsored enterprises (GSEs). This includes borrowers of FHA, VA and USDA loans, as well as homeowners with mortgages through Freddie Mac or Fannie Mae. However, renters don’t automatically qualify for these protections, and they must still meet certain criteria to qualify for the protection.

What this means if you’re waiting to buy

If you’ve been waiting for housing prices to fall before buying a home, the news means you’ll likely be waiting at least a bit longer. There’s currently a high demand in the housing market, and inventory is low in many major cities. This translates to a seller’s market in which you can expect home prices to continue rising.

When will home prices start falling?

It’s unlikely that the housing market will change much before the end of January, as struggling homeowners will be able to stay in their residences longer, and landlords interested in selling their properties won’t be able to evict their tenants. (It’s important to note, however, that while renters may be able to remain in their residences even if they can’t make their full payment each month, they can still be evicted for violating the terms of their leases.)

In all likelihood, home prices will continue to trend upward at least until February. But it’s reasonable to assume that once the moratorium ends, inventory will increase and home prices will become more competitive.

Is the moratorium likely to be extended again?

With several vaccines expected to make their way to market during the next six months, housing protections are likely to end at some point soon. No one knows with any certainty whether the moratorium will be extended, but the FHFA is actively monitoring the impact of the pandemic upon the mortgage industry, and it will respond accordingly.

Ready to buy now?

Despite rising prices and the lack of inventory on the market, mortgage rates remain at record low levels. If you can’t wait any longer to buy a home, explore the rates and terms offered by today’s best mortgage lenders.

Photo: Getty Images

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