Pandemic Leads to Extensions on Foreclosure Moratoriums and QM Deadlines
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB) are altering key dates on initiatives related to the COVID-19 pandemic.
Last week, FHFA announced extensions of several measures to align COVID-19 mortgage relief policies across the federal government.
First, the agency extended the moratorium on single-family foreclosures and real estate owned (REO) evictions. It was set to expire on March 31 and has been extended to June 30. The REO eviction moratorium applies to properties that have been acquired by an enterprise through foreclosure or deed-in-lieu of foreclosure transactions.
FHFA also announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional three-month extension of COVID-19 forbearance, for up to 18 months. Eligibility for the extension is limited to borrowers who are in a COVID-19 forbearance plan as of February 28, 2021, and other limits may apply.
“Borrowers and the housing finance market alike can benefit during the pandemic from the consistent treatment of mortgages regardless of who owns or backs them,” said FHFA Director Mark Calabria. “Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government.”
Also last week, CFPB said it expects to propose a delay to a pair of qualified mortgage rules scheduled to take effect March 1.
In December, the bureau issued two final rules relating to the qualified mortgage (QM) definition under the Truth in Lending Act. One was was a general QM loan definition. The other was for a new category of seasoned QMs.
The new mandatory deadline, under the bureau’s proposal would be July 1, 2021.
The bureau said that if the General QM rule is delayed, creditors would be able to use either the current General QM loan definition or the revised General QM loan definition for applications received during the period from March 1, 2021, until the delayed mandatory compliance date.
CFPB said the delay was proposed to “ensure consumers have the options they need during the pandemic and the financial crisis it has caused, as well as to provide maximum flexibility to the market.” The bureau also said that an extension would allow lenders more time in which they could make QM loans based on a debt-to-income ratio or whether the loans are eligible for sale to Fannie Mae or Freddie Mac, and not just a pricing cut off.
CFPB said it is considering whether to revisit the Seasoned QM Final Rule. If the bureau decides to do so, it expects to consider in that rulemaking whether any potential final rule revoking or amending the Seasoned QM Final Rule should affect covered transactions for which an application was received during the period from March 1, 2021, until the effective date of such a final rule.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
