b2ap3_thumbnail_foreclosure-moratorium-forbearance-loan-modification.jpgDuring the COVID-19 pandemic, many Americans have faced financial difficulties, causing them to be unable to pay some of their debts and ongoing expenses. To prevent people from losing housing during a public health emergency, the federal government and multiple states have implemented a moratorium on foreclosures for certain types of mortgages, preventing lenders from repossessing people’s homes. While the federal foreclosure moratorium has been extended several times, it is currently set to end on June 30, 2021. Because of this, homeowners who have defaulted on their mortgage or who are struggling to make payments will need to understand their options for avoiding foreclosure.

Mortgage Forbearance and Loan Modifications

Once the foreclosure moratorium ends, lenders may begin foreclosure proceedings against those who have defaulted on their mortgages. Some lenders have stated that they have halted all foreclosure activities until the end of 2021, while others may resume foreclosures as early as July of 2021. Homeowners who are behind on mortgage payments may need to take action before the end of the moratorium to ensure that they can prevent the loss of their homes.

Along with the foreclosure moratorium, current federal policies require lenders to allow homeowners to receive a forbearance on mortgage payments for federally-backed loans. This will allow for payments to be paused temporarily while a family is experiencing financial hardship. The deadline to apply for forbearance is June 30, 2021, and a homeowner may receive up to 12 months of forbearance. If a person had already received a forbearance before June 30, 2020, they can receive an additional six-month forbearance, up to a maximum of 18 months. 


Foreclosure defense and loan modification attorney near meHomeowners may experience a variety of financial difficulties that cause them to be unable to meet their financial obligations, and if they default on their mortgage, they may face the foreclosure of their home. During the COVID-19 crisis, this has become a major concern, since factors such as job losses or increased expenses due to illness have affected many homeowners’ ability to make mortgage payments. Those who are facing a potential foreclosure or struggling to pay off debts may consider bankruptcy, but for those who are not ready to take this drastic step, other alternatives may be available, including requesting loan modifications from a mortgage lender.

Types of Loan Modifications

To provide relief for those who have been affected by the COVID-19 pandemic, the federal government and many state governments have placed a moratorium on foreclosures. Borrowers who are experiencing financial hardship and who have a mortgage insured by the Federal Housing Administration (FHA) can receive a six-month forbearance of their mortgage payments, as well as an additional six-month extension if needed. A forbearance will allow a homeowner to defer their mortgage payments, although they will be required to make up any deferred payments once the period of forbearance has ended. 

Even after receiving a forbearance, some homeowners may find that they will be unable to afford ongoing mortgage payments alongside their other financial obligations. In these cases, a homeowner may be able to negotiate with their lender to modify the terms of their loan. Many lenders are willing to make these types of modifications, since proceeding with the foreclosure process may result in financial losses. Making arrangements in which ongoing payments will be made is often the most financially beneficial option for both parties.


Bankruptcy attorney near me for COVID-19 financial hardshipWhile many Americans struggle with debt even in the best of times, the COVID-19 pandemic has created a crisis that has affected millions of people and families. Job losses and other financial issues have made it difficult or impossible for many people to pay their ongoing expenses, putting them at risk of foreclosure or eviction. In addition to financial problems, this may also lead to significant safety issues, since being forced out of a home would likely increase the chances of family members becoming infected and suffering serious health problems. Fortunately, the federal government has taken action to protect families in these circumstances, including providing options for addressing mounting debts through bankruptcy.

Foreclosure Moratoriums and Mortgage Forbearances

When the coronavirus pandemic began to reach crisis levels in 2020, the federal government placed a moratorium on foreclosures, and as the crisis has continued, this moratorium has been extended several times. Most recently, President Joe Biden issued an executive order extending the moratorium at least through March 31, 2021. This moratorium applies to mortgages on single-family homes that are insured by the Federal Housing Administration (FHA). 

In addition to prohibiting lenders from beginning or proceeding with foreclosures while the moratorium is in effect, the Department of Housing and Urban Development (HUD) has also required lenders to provide forbearances to borrowers who have experienced financial hardship due to COVID-19. This will allow borrowers to defer mortgage payments for up to six months, and if necessary, borrowers can request an extension and receive an additional six-month forbearance.



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