Homeowners who have been affected the recent hurricanes, Harvey, Irma and Maria, and whose houses are insured by the Federal Housing Administration are given an extension of another 90 days to the foreclosure moratorium.
Initially, the foreclosure moratorium period is just 90 days. But with the extension, homeowners now have 180 days of probation. Qualified borrowers in presidentially declared counties and municipalities where the Federal Emergency Management Agency or FEMA is administering the Individual Assistance Program can take advantage of the extension.
All foreclosure actions will be suspended until Feb. 21, 2018 for borrowers impacted by Hurricane Harvey, until March 9, 2018 for those hit by Hurricane Irma, and until March 19, 2018 for Hurricane Maria.
Who is Qualified for the Moratorium?
An FHA-insured homeowner can qualify for the foreclosure moratorium only if:
- The person(s) lives within the presidentially declared disaster areas.
- the homeowner’s capacity or ability to pay the mortgage has been directly or considerably affected by the disaster.
- a member(s) of the household was injured, went missing or has died as a direct result of the disaster.
What is a Foreclosure Moratorium?
This is a temporary suspension of all foreclosure activities for a specified period of time. A moratorium can be enacted by a lender or insurer for any reason deemed substantial. In this case, it is the recent hurricanes which have affected a significant number of households. In other instances, a lender may consider a moratorium if there has been a drastic increase in the number of foreclosures.
How Does this Benefit the Borrower?
While a moratorium won’t get rid of your debts and won’t release you from any liability for paying the mortgage, it has a number of benefits.
This one is obvious. When a foreclosure is frozen, it buys the borrower ample time to closely evaluate his/her present situation. Doing so allows him/her to plan a course of action. Moreover, this period enables the person to execute such plan.
Search for options
During a moratorium, homeowners may want to search for other options to deal with a foreclosure. They may consider taking a refinancing program designed to stop it. Another option is to make payment adjustments so as to save the home.
Allows Borrowers to Fix Their Budget
The delay caused by a moratorium gives a homeowner time to fix his/her finances. During this time, he.she can make necessary adjustments to his/her budget. It also enables the borrower to save a significant amount of money to resume making mortgage payments.
Keep People in Homes
A suspension in foreclosure may prevent people from becoming homeless. A borrower may no longer be able to continue making payments, but the time a moratorium provides allows a borrower to look for another home to live in. Moving requires time, from searching for another decent place to moving in.
A foreclosure moratorium can mean a big difference for someone who is facing foreclosure. It means a lot more to those who have been affected by the devastating hurricanes. These people have already gone through a lot of difficulties, losing a house is the last thing they want to deal with.