The President Biden administration, in light of COVID-19 and a housing affordability crisis, extended the foreclosure moratorium and mortgage forbearance protections on February 16th, 2021.
The administration justified the decision based on a Center on Budget and Policy Priorities study that said 13 million adults living in rental housing who were not caught up on their rent, and 81 million adults (or about 35% of adults in this country) who reported that usual household expenses (such as car payments, student loans and mortgages) were difficult to cover in the last seven days.
Homeowners with federally backed mortgages now have until June 30, 2021 to avoid foreclosure, mortgage forbearance has been extended until June 30, 2021, and mortgage payment forbearance has been extended up to six months for borrowers who entered forbearance on or before June 30, 2020.
The new order, however, did not include any extension of relief for renters.
What does this mean?
The news of the extensions means that holders of mortgages insured by the Federal Housing Administration or guaranteed by Fannie Mae and Freddie Mac are protected under the moratorium.
The two mortgage giants, which cover approximately 80% of all mortgages, have said in addition to the Biden’s announcement, they may also waive your payments for up to 12 months. That being said, it turns out that these extensions only apply to the homes/complexes backed by federal mortgages/loans.
Essentially, if you’re a landlord financed through a bank or private financing, this does not affect you and it also does not apply if the property or asset is completely paid off.
In certain counties, cities and municipalities, evictions may have been banned or postponed, but there are also ways for landlords to still have their rights to payment or property be protected.
The bottom line?
Until the health crisis passes, it appears the government is continuing to provide economic relief for both landlords and renters. As a property investor, being unable to collect rent has been challenging, and cheap, foreclosed properties have been hard to come by in recent months.
Outside of legal means, landlords do have a number of options available to them in order to protect themselves, such as beginning to offer credit card processing and improving their tenant screening procedures.
Additionally, those looking to invest can use this opportunity to forestall on their mortgage payments and begin looking at other markets (possibly outside the country), consider multi-family or commercial real estate properties instead of single-family homes, or even venture outside of physical assets and look into real estate stocks and/or real estate investment trusts (REITs).
As it stands, the world of real estate investing is no longer reserved for millionaires and private firms with large bank accounts. Those barriers have been broken down, and creative investors are now seizing on the opportunity.
At Sunset Equity, you can get the small firm feel with a large financial backing. Our offerings have allowed investors to weather the global pandemic storm, assisting them with everything from fix-and-flips and ground -up construction loans, to refinancing.
The unwavering reliability and speed of our qualified team gives our clients the assurance that we can close any loan within 10 to 15 business days after origination, granting up to 85% LTC and 100% construction, and 80% LTV for first time flippers, and more!
Benjamin Donel, CEO