COLUMBUS, Ohio, Dec. 4, 2020 /PRNewswire/ -- The Federal Housing Finance Agency's decision to have Fannie Mae and Freddie Mac extend a freeze on foreclosures of single-family homes and residential evictions was not unexpected but leads to additional problems said Richard Kruse, the president of Gryphon USA, Ltd. and leading auctioneer of foreclosure property.
Kruse said that clearly many homeowners still need assistance but expressed concern that the extension just delays inevitable pain. "The underlying problem is still there and the extension does not provide any solution," Kruse said.
The moratorium on foreclosures of occupied homes financed through government-sponsored enterprises (GSEs) such as Fannie and Freddie began in March as the COVID-19 pandemic began to shake the U.S. economy. It has now been extended until "at least January 31, 2021" according to a news release from FHFA.
Kruse believes that another extension to the moratorium only postpones the negative impact the foreclosures will cause as unpaid bills lead to higher levels of default.
A Census Bureau survey in September shows 9% of 48 million homeowners are behind on their mortgage payments. The Mortgage Bankers Association cites that 5.58% of mortgages are in formal forbearance as of November 22.
"Continuing with the moratoriums indefinitely," Kruse said, "will significantly disrupt future economic performances as home payoff and credit card balances grow, leading to more debt issues and bankruptcy increases."
The lack of certainly on when foreclosures may proceed also has implications for landlords of residential rental properties. As income continues to decline, so does the availability of funds for property maintenance which can also eventually lead to displacement of tenants.
Shut downs and quarantines, the underlying reason for the moratoriums, are also affecting the commercial sector, including owners of hotel, restaurant and retail properties as well as the job market, especially in the hospitality and tourism sectors.
Kruse concludes that: "Policymakers will have to contend with the fallout of the moratorium even as the next natural wave of defaulting loans forms. The prospect of COVID-19 vaccines could clarify when the moratorium will end allowing tenants and property owners to begin plans for the next step."
If you would like more information about this topic, please call Richard Kruse at 614-774-4118 or email firstname.lastname@example.org.
Additional background can be found at https://mortgageorb.com/fhfa-extends-foreclosure-and-reo-eviction-moratoria-2.
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SOURCE Gryphon USA