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FHFA Extending Foreclosure, Eviction Moratoriums: What It Means for Investors


[Updated: Jan 20, 2021] Jan 20, 2021 by Aly J. Yale
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The Federal Housing Finance Agency (FHFA) has once again extended its foreclosure and eviction moratorium, this time until Feb. 28. The agency had previously extended the measures until Jan. 31 back in December.

According to FHFA Director Mark Calabria, the extension is aimed "to keep our communities safe and families in their homes during the COVID-19 pandemic."

If you're a real estate investor, you're probably wondering how the move will impact your business -- not to mention your bottom line. Here's what you need to know.

Who the moratorium applies to

The FHFA's foreclosure moratorium only applies to properties financed with a GSE-owned loan, meaning one purchased by Fannie Mae (OTCMKTS: FNMA) or Freddie Mac (OTCMKTS: FMCC). Properties also must be single-family to qualify.

For investors, the measure could spell two things:

  1. Financial relief if you're struggling: If you're facing difficulties paying your mortgage, the FHFA's move could give you some much-needed protection -- at least for the next six weeks. Don't forget: You can also apply for a forbearance plan with your mortgage servicer. These allow you to pause mortgage payments for up to 360 days.
  2. Fewer distressed properties to choose from: If you often look to foreclosed and distressed properties for low-cost investments, you might find it even harder than usual. These homes have been in short supply in recent months, but with the FHFA's latest extension, things could get worse.

The eviction moratorium pertains only to REO properties -- ones seized by Fannie or Freddie due to a foreclosure or deed-in-lieu of foreclosure. In properties that fall under this category, tenants cannot be evicted until at least Feb. 28.

Other protections are still in place

If your property doesn't fall under the FHFA's latest measure, there may be other government relief efforts that apply. Under the CDC's recent bill, for example, renters making under $99,000 (or $198,000 for couples) cannot be evicted due to COVID-related nonpayment of rent. As of now, that measure's in effect until Jan. 31.

There's also the FHA moratoriums, which ban evictions and foreclosures on FHA-backed properties until Feb. 28.

The bottom line

With the COVID-19 pandemic still raging, the government is working hard to provide consumer-side relief -- particularly surrounding housing costs. Naturally, if you're a property investor, this will continue to impact your bottom line until the health crisis dissipates.

To weather the storm, consider offering credit card processing to allow struggling renters an alternative form of payment, and be extra careful with tenant screening procedures until eviction bans have expired. Finally, if you're finding it hard to snag an affordable property, try one of these five alternatives.

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