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Do the President’s Inaugural Executive Orders Affect Mortgage Lenders?

 Posted on January 21, 2021 in Mortgage Foreclosure

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Joseph R. Biden, Jr. was inaugurated as the 46th President of the United States of America on January 20, 2021. With barely enough time to celebrate this major achievement, he rushed to work and signed off on several executive orders and actions on his first day in office. One such executive order included extensions on the moratorium for mortgage foreclosures and rental evictions. Here are the details on this latest executive order, particularly helpful if you are a mortgage lender or servicer attempting to collect on the homeowners’ debts.

Extensions on Mortgage Foreclosure Moratoriums and Forbearance

President Biden issued several executive orders dealing with a wide variety of topics, including climate change, student loan debt, COVID-19 relief and regulations, and immigration. Of particular interest to mortgage lenders is the moratorium extension; request for even further extensions in the future; and updates to the newest forbearance guidelines. With regards to the moratorium, the new order mandates that:

  • Federal agencies, including the USDA, the Single-Family Housing Direct Loan Program (SFHDLP), and the Single-Family Housing Guaranteed Loan Program (SFHGLP), extend the foreclosure and eviction moratoriums by at least two months, from January 31, 2021, to March 31, 2021. 

  • In addition, the President is hoping his multitrillion-dollar relief bill will encourage legislators to further consider an even longer moratorium period, for an even broader set of renters and mortgage borrowers.

Concerning the new forbearance requirements, the new order directs that:

  • The original guidelines of the Coronavirus Aid, Relief, and Economic Security (CARES) Act may be extended, if the borrower wants them extended. This means that they can extend the forbearance another 180 days if desired. As a mortgage lender who is collecting on these debts, you or your debt resolution team must tell the mortgage holder that there are various ways they can resolve the debts once the final extension of forbearance ends. You also must notify them that they are not required to pay the full lump sum in missed payments owed at the end of the forbearance period, especially since they will have other options.

  • You need to explain that additional accrual of fees, penalties, and interest beyond those provided for if they had made all full mortgage payments on time will not ever accrue or be owed.

  • You must also make the borrower aware of their options for resolving the debt that accumulated over the last several months. These loss mitigation options include:

    • Affordable Repayment or Workout Plans

    • Term Extensions

    • Capitalization and Term Extensions

    • Mortgage Recovery Advance

Contact an Illinois Mortgage Lender Collection Lawyer

While it might be difficult to collect on mortgage debt in the coming weeks or even coming months, there are still processes you must follow to ensure that the borrower fully understands the executive order and what their options are as a result. Until the moratorium or forbearance period ends, there is not much that you can do. If you have any questions about this or need legal guidance, reach out to an experienced Chicago mortgage debt collection attorney. Call the skilled team from Dimand Walinski Law Offices, P.C., at 312-704-0771 to schedule a consultation for the answers and representation you need.



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