Homeowners in government mortgage programs remain at risk of unnecessary foreclosure

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Homeowners in government mortgage programs remain at risk of unnecessary foreclosure

Homeowners in government mortgage programs remain at risk of unnecessary foreclosure

The Hill-

One aspect of the recent government shutdown that has received too little attention is that it significantly increased the risk that thousands of struggling homeowners across the nation would lose their homes. For example: in California, an elderly woman who recently lost her husband is on the verge of losing her family home due to the shutdown. Her lender wrongfully denied her for a deferral program designed to protect certain newly widowed spouses from foreclosure and eviction, but the Housing and Urban Development (HUD) representative who was helping her was furloughed during the shutdown. Even though the shutdown has ended, this widow is still facing foreclosure in February unless HUD takes action to address cases like hers that have piled up while critical agency resources were unavailable.

Sadly, this is not an isolated example. Over 9 million borrowers, most of them low-income, seniors, and/or residents of rural areas, have home mortgages that are either provided or insured by government mortgage programs run by HUD or the Department of Agriculture (USDA). Because key departments at both agencies were operating at drastically reduced capacity or not at all for over a month, thousands of homeowners could not get the help they needed to save their homes. Some may already have undergone foreclosure, and many remain at risk as HUD and the USDA reopen with a substantial backlog of requests for assistance. Unnecessary foreclosures on HUD and USDA borrowers will not just impact vulnerable homeowners; they will also lead to needless losses to the agencies’ mortgage insurance funds.

But HUD and the USDA can prevent further serious damage by taking a few simple steps: First, they should extend or waive any foreclosure-related deadline by at least 35 days. Second, they should issue a stay on foreclosures until they clear the backlog of pending requests for assistance. Third, they should direct lenders to rescind any foreclosures that occurred during the shutdown. And, in the event of another shutdown, the agencies should hit the pause button on foreclosures and related deadlines as they should have done during the recent shutdown.

[THE HILL]

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