Millions of homeowners have put their mortgage loans in forbearance over the last year. In fact, according to the Mortgage Bankers Association (MBA), more than 5% of all loans are currently still in forbearance, amounting to about 2.7 million homeowners nationwide.
Though those numbers had largely been trending downward over the past few weeks, they're now poised to grow, thanks to a new announcement from the Department of Housing and Urban Development (HUD). According to an agency press release, HUD is officially extending the deadline by which FHA borrowers can file for forbearance. Previously, they had until Jan. 31 to apply. Now, it's March 31.
HUD made the move in support of "Biden Administration Day One actions to provide economic relief to those suffering financially due to COVID-19," according to the release. The news comes just a few weeks after the agency announced it would extend its foreclosure and eviction moratoria, too.
If you're a real estate investor with FHA-backed properties or you regularly invest in distressed properties, the extension will almost certainly impact your business. Here's what you need to know.
HUD's extension allows homeowners with FHA-insured mortgages to request forbearance through March 31, essentially putting their mortgage payments on pause until the forbearance expires (or they request to go back into regular repayment).
Now, to be clear: This doesn't mean FHA forbearances will end at the close of March. That's just when borrowers can apply for their first forbearance stint, which can last up to a whopping 180 days.
At that point, if the borrower is still in dire financial straits, they can apply for an extension. These offer yet another six months of forbearance, bringing the grand total for an FHA forbearance up to 360 days -- just shy of a full year.