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August Expiration Date for Federal Foreclosure Moratorium Raises Concerns
The Federal Housing Finance Agency (FHFA) has been insulating the U.S. housing markets since March with measures like a foreclosure moratorium for federally backed mortgages and forbearance for homeowners experiencing financial hardship during the pandemic.
But the foreclosure moratorium is set to expire in August, according to an article by Jeff Andrews, risking a wave of foreclosures like during the Great Recession. That expiration data comes with the additional risk presented by a rising mortgage delinquency rate among homeowners. "In January, just 3.22 percent of mortgages were in delinquency. By May, that number shot up to 7.76 percent — about three points shy of where the delinquency rate peaked during the financial crisis of 2008, which was at 10.57 percent," reports Andrews.
There's no need to panic yet, according to Andres. The forbearance protection will last for a year, but even that extra protection will run out eventually, if the economic effects of the pandemic lingers in the United States into 2021.
Meanwhile, protections offered by the federal government to low-income renters have already expired last week, sparking concern about a coming wave of evictions and increasing homelessness.