Loan Foreclosures and Forbearance

Credit unions should not foreclose on properties protected under the CARES Act. The CARES Act prohibits foreclosures on single-family, federally backed mortgage loans for 60 days, beginning on March 18, 2020, and ending on May 17, 2020. Fannie Mae, Freddie Mac, FHA, VA and USDA later extended this to June 30, 2020. The foreclosure moratorium expiration for mortgages purchased by Fannie Mae and Freddie Mac currently extends until August 31, 2020.

Additionally, the CARES Act provides up to 90-day forbearance to borrowers of federally backed, multifamily mortgage loans who experience financial hardship related to the COVID-19 pandemic. Borrowers who receive forbearance may not evict or charge late fees to tenants for the duration of the forbearance period. Those mortgages include loans to real property designed for five or more families that are purchased, insured, or assisted by Fannie Mae, Freddie Mac, HUD, or any other federal agency. This requirement terminates December 31, 2020, or when the COVID-19 public health emergency is terminated, whichever occurs earlier.

Questions to Consider

  • Does the credit union hold any single-family, federally backed mortgage loans? If yes:
    • Does the credit union have the procedures and controls in place to ensure borrowers of who have experienced financial hardship related to the COVID-19 pandemic are allowed up to 180-day forbearance on mortgage payments on their initial request, and an additional 180-day forbearance if subsequently requested?
    • Does the credit union allow borrowers to make such requests without providing additional documentation?
    • Do the credit union’s procedures and controls provide these relief measures through December 31, 2020, or when the COVID-19 national emergency declaration is terminated (whichever occurs earlier)?
  • Did the credit union initiate any foreclosure proceedings of any single-family, federally backed mortgage loans in the period beginning on March 18, 2020? If yes:
    • The credit union may be in violation of the CARES Act provision if the foreclosure proceedings were initiated before the moratorium expiration dates listed above.
  • Does the credit union hold any multifamily federally backed mortgage loans? If yes:
    • Does the credit union have the procedures and controls to ensure borrowers who have experience financial hardship related to the COVID-19 pandemic were allowed up to 90-day forbearance on mortgage payments?
    • Do the credit union’s procedures and controls provide for ongoing reviews to ensure borrowers who receive such forbearance are not evicting or charging late fees to tenants for the duration of the forbearance period?
    • Do the credit union’s procedures and controls provide these relief measures through December 31, 2020, or when the COVID-19 national emergency declaration is terminated (whichever occurs earlier)?

Last updated on September 15, 2021