Hello, LOs!
It's August, and we're living in a post-ban world. There is no longer a federal ban on foreclosures for federally backed mortgages, or evictions.
But that's where the two stories diverge: the federal government is handling the expiration of the two bans very differently.
Borrowers who are coming out of forbearance have access to a suite of options from federal agencies to lower their payments and avoid foreclosure. Those options include extending the loan term to 40 years, or reducing the interest rate. Some borrowers could receive an interest-free subordinate mortgage not due until after the first mortgage is paid off, otherwise known as a partial claim.
The options for homeowners facing hardship is a remarkable display of the federal government's power over the single-family housing market. It has many levers to shape the housing market. Its most immediate emissary to the market is the Federal Housing Finance Agency, through its regulated entities Fannie Mae and Freddie Mac, which back half the nation's mortgages.
But the FHFA doesn't have the same clout in the rental market.
On Friday evening, just hours before the expiration of the eviction ban, the FHFA issued a statement "encouraging" rental landlords to apply for rental assistance before evicting their tenants.
"[Evictions] should be avoided if possible, especially during the pandemic," said Sandra Thompson, the acting director of the FHFA.
A Supreme Court decision in late June made it clear that the Biden administration could not extend the Centers for Disease Control eviction ban without Congressional approval. It was surprising to some, however, that Biden waited until two days before its expiration to ask Congress to help.
Congresswoman Maxine Waters, who chairs the House Financial Services Committee, blamed President Biden's "unexpected lack of effort and refusal to use his authority to extend the moratorium on evictions" in a statement explaining why a bill to extend an eviction ban failed.
Meanwhile, the Biden administration directed some federal housing agencies to put evictions on hold until the end of September. Those units represent a small slice of the nation's 44 million rental households, however.
There had been some talk at the beginning of the pandemic — before more contagious variants complicated matters — that a wave of evictions and foreclosures might free up some units and, perhaps, ease the limited housing supply.
I wouldn't count on that yet. An early analysis from Princeton's Eviction Lab showed that the CDC moratorium reduced filings by about half in 2020. Some states, however, have much more stringent limits on evictions.
How do you think the expiring eviction ban will impact the nation's single-family housing market? Do you believe that the federal government should intervene in the rental housing market at a national scale, the way it does with the mortgage market?
Share your thoughts with me anonymously via email at gkromrei@housingwire.com.
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
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