The Federal Housing Finance Agency on Wednesday directed servicers of Fannie Mae and Freddie Mac-backed loans to pause foreclosures for up to 60 days upon notification that borrowers have applied for Homeowner Assistance Fund money.
“Today’s action will provide borrowers who need temporary mortgage assistance with additional time to be evaluated for relief,” said Sandra Thompson, acting director of the FHFA, in a press release.
The move provides direction to servicers who have been trying to determine how best to juggle the phase-out of other types of federal housing relief at the same time that states, U.S. territories and tribal entities have been distributing the up to $9.96 billion available from the Treasury’s fund.
The specific allocations for HAF money, deadlines for applications, and the amount of funds remaining vary by jurisdiction. Possible uses of HAF money may include some non-mortgage housing assistance for things like utility payments or delinquent property taxes, but generally foreclosure relief is among the designated allocations for it.
The direction given to the servicers of loans backed by the two government-sponsored enterprises is in line with that provided more broadly to mortgage companies by the Consumer Financial Protection Bureau, said Marissa Yaker, managing attorney, regulatory affairs, at the Padgett Law Group
“Today’s announcement by FHFA will continue to assist borrowers as they navigate the process to apply for Homeowners Assistance Funds, and aligns with the CFPB,” she said in an email.
Last month, an official at the bureau warned mortgage companies that “complaints about challenges working with servicers to use HAF funds” would be a focus of regulatory reviews.
“Servicers should review their existing policies and procedures to ensure that borrowers are not improperly referred to foreclosure, for example, especially while a servicer is working with a borrower during the HAF applications process or awaiting payment,” Lorelei Salas, assistant director for supervision policy at the CFPB, said in a blog.
