The moratoriums on single-family foreclosures and evictions for certain federally-backed mortgages have been extended until the end of December.
The extensions will benefit 28 million homeowners who have mortgages guaranteed by Fannie Mae and Freddie Mac, according to the press release from the Federal Housing Finance Authority.
The eviction moratorium applies to properties that have been acquired by Fannie or Freddie through foreclosure or deed-in-lieu of foreclosure transactions.
Both moratoriums were initially expected to expire in August 31.
“I think this is a positive step for homeowners in the lower and middle income brackets,” said Mark Zandi, chief economist at Moody’s Analytics. “Extending the moratorium through the pandemic is a good idea, because it will limit long-term damage that would occur if people lose their homes.”
‘We need Congress to pass a fiscal package’
While the current extension will act as a temporary reprieve for those with single-family housing, the FHFA said it is monitoring the situation if additional action is needed. FHFA projects more additional expenses of $1.1 billion to $1.7 billion, due to the existing COVID-19 foreclosure moratorium.
More needs to be done, experts said. The moratoriums leave out the estimated 30 million American renters who are at risk of being evicted. Nearly a third of homeowners and renters entered August with unpaid housing bills.
More than two weeks ago, President Donald Trump issued an executive order directing federal agencies to address evictions during the pandemic.
The moratoriums also doesn’t address the mounting job losses, with another 1 million workers filing for unemployment benefits last week.
“If all we get is just an eviction moratorium on forbearance, that’s not going to sufficiently bridge the economy to the other side,” Zandi said. “We need Congress to pass a fiscal package to provide support to the economy, otherwise we’ll see credit problems.”