Fannie Mae, Freddie Mac and HUD to suspend foreclosures
The Federal Housing Finance Agency said it's ordering Fannie Mae and Freddie Mac to suspend foreclosures and evictions for at least 60 days. The decision was announced shortly after President Donald Trump said the Department of Housing and Urban Development will suspend housing evictions and foreclosures through April because of the coronavirus.
HUD "is providing immediate relief to renters and homeowners by suspending all foreclosures and evictions until the end of April," Mr. Trump said at a press conference to discuss the pandemic on Wednesday. The FHFA said in a statement that its decision will impact homeowners with a single-family mortgage backed by either Fannie Mae or Freddie Mac.
The move from Fannie Mae and Freddie Mac likely affects more homeowners given the government-backed enterprises guarantee almost $7 trillion in mortgage-related debt, according to The Washington Post.
The effort is geared at stabilizing the housing market and avoiding a repeat of the spike in foreclosures witnessed in the 2008 financial crisis, housing experts said.
"If your income has been compromised, it means you will be able to stay in place," said Daryl Fairweather, chief economist of real estate firm Redfin. "It has economic consequences and health consequences: We want people to shelter in place. If they move, it'll increase exposure to other people."
About 6 of 10 Americans have mortgages, according to Danielle Hale, chief economist of Realtor.com. Those borrowers tend to be younger, since more than half of those over 65 don't have a mortgage at all, she noted.
"We are experiencing a huge shock, and that's why the government is being proactive that even if you miss couple of paychecks you may have money to make a mortgage or rent payment," Hale noted.
In a statement, HUD said the moratorium applies to Federal Housing Administration-insured single-family mortgages for 60 days, as well as Home Equity Conversion mortgages, or reverse mortgages. Secretary Ben Carson said the decision will "provide homeowners with some peace of mind during these trying times."
The move comes as the Trump administration is working on a number of measures to provide economic relief to Americans as the pandemic worsens, such as providing cash payments to consumers.
HUD, which enforces the 1968 Fair Housing Act, runs programs focused on rental housing assistance and public housing. It also provides Section 8 vouchers for low-income renters and other disadvantaged groups.