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Attorney General Josh Stein Works to Protect Homeowners During COVID-19 Pandemic

For Immediate Release:
Thursday, April 23, 2020

(RALEIGH) Attorney General Josh Stein today took action to help homeowners struggling financially during the COVID-19 pandemic and the unprecedented disruption to the mortgage market. Attorney General Stein joined a bipartisan coalition of 35 attorneys general in sending letters recommending actions to the Federal Housing Finance Administration (FHFA) and the U.S. Department of Housing and Urban Development (HUD).

“Every little bit of relief and assistance is vital for North Carolinians who have lost their jobs and their income during this pandemic,” said Attorney General Josh Stein. “In addition to allowing people impacted by the crisis to pause in their federally-backed loan payments, these payments should be tacked onto the end of the loan, not come immediately due in a lump sum payment after 180 days.”

The coalition applauded federal efforts to suspend evictions and foreclosures and expressed appreciation for additional forbearance and foreclosure relief provided by the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The legislation provides protections for homeowners whose loans are backed by Fannie Mae, Freddie Mac, or other federal entities. As part of the CARES Act, FHFA and HUD have already adopted streamlined processes for borrowers who have been affected by COVID-19 to enter into forbearance plans, which allow borrowers to pause mortgage payments for a limited period of time. Currently, once the forbearance period ends, borrowers are being asked to either repay the missed payments in a lump sum or enter into a more permanent loss mitigation solution.

The coalition makes three additional recommendations in its letters:

  • FHFA and HUD should issue guidance revising their forbearance programs so that forborne (or missed) payments are automatically placed at the end of the loan’s term. This would allow immediate relief for homeowners and reduce confusion for borrowers while also limiting the strain on the mortgage service industry.
  • FHFA and HUD should expand eligibility for disaster relief loss mitigation programs.
  • FHFA and HUD should clarify that the moratorium on foreclosures and evictions applies to all aspects of the foreclosure or eviction process. That includes issuing pre-foreclosure and acceleration notices, posting or publishing any notices, filing or proceeding with motions beyond continuances, or taking any other foreclosure or eviction action during the moratorium.

Individuals who have a federally backed mortgage have the right to request a forbearance for up to 180 days if you have a financial hardship due to the coronavirus pandemic, as well as the right to request one extension for up to another 180 days. The Consumer Financial Protection Bureau offers a guide to coronavirus mortgage relief options. To determine whether you are eligible for a forbearance plan or other assistance, first determine who services your mortgage and whether you have a federally backed mortgage – see tips from CFPB or go to FannieMae’s or Freddie Mac’s look up tool. If you do not have an eligible mortgage, your servicer or financial institution may be offering relief to borrowers. Call your servicer and let them know your situation immediately. Ask them what forbearance and hardship options may be available.

A copy of the letter to FHFA is available here.

A copy of the letter to HUD is available here.

Attorney General Stein is joined in sending today’s letters by the Attorneys General of California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada,  New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Vermont, Virginia, Washington, West Virginia, and Wisconsin.

More on Attorney General Stein’s work to protect North Carolinians during the COVID-19 pandemic:

Contact:
Laura Brewer (919) 716-6484

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