FHFA Announces Foreclosure Hold for HAF Applicants

Fannie Mae and Freddie Mac servicers will be required to delay foreclosure actions for up to 60 days if the servicer has been told that a borrower has requested help from the Treasury Department’s Homeowner Assistance Fund (HAF), according to the Federal Housing Finance Agency (FHFA).

“FHFA is committed to sustainable homeownership. Today’s action will provide borrowers who need temporary mortgage assistance with additional time to be evaluated for relief through their state’s approved Homeownership Assistance Fund,” said FHFA Acting Director Sandra L. Thompson. 

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The Consumer Financial Protection Bureau (CFPB) released a blog post last month encouraging mortgage servicers to join in HAF initiatives. Homeowner Assistance Fund (HAF) funds can assist homeowners to avoid foreclosure, which can be a critical factor for them, but only if mortgage servicers collaborate with state housing finance agencies and HUD-approved housing counselors to guide borrowers through the application process. 

Fannie Mae and Freddie Mac have released Updated Lender Letter 2021-01 and Bulletin 2022-8, respectively, that implement the requirement for servicers to suspend foreclosure activities for up to 60 days if the servicer has been notified that a borrower has applied for assistance from the Treasury Department’s Homeowner Assistance Fund (HAF). This action is the latest step taken by FHFA to assist homeowners who have been financially harmed by the COVID-19 outbreak. Servicers must delay or suspend any court or non-judicial foreclosure actions, move for a foreclosure judgment or order of sale, or execute a foreclosure sale for up to 60 days, if:

• The borrower has applied for HAF assistance, and the servicer has been alerted.
• The servicer has enough time to postpone the start of the foreclosure procedure or the filing of a foreclosure judgment or order of sale.
• The servicer, in the case of a foreclosure sale, is notified at least 7 days before the sale; and
• Any foreclosure proceeding or execution of a foreclosure sale can be delayed without dismissal of the action.

For more information on getting a grant and also learning about refinance programs, take a look at this.

The guidance further states that if a servicer finds that it does not have enough time to postpone the start of the foreclosure process or the filing of a foreclosure judgment or order of sale, it must indicate it in the loan file. If the approved funds do not fully restart the mortgage loan, the servicer must contact the borrower to establish the right party contact and address the remaining default, according to this guidance. It’s unknown whether other federal regulators of residential mortgage loan programs, such as the Federal Housing Administration, the Department of Veterans Affairs, and the USDA’s Rural Housing Service, or investors in other mortgage loan portfolios, will follow suit.