FHA, FHFA re-up eviction bans at Biden’s urging

A day before the federal eviction ban lapses, the Biden administration is using the levers it has through federal agencies to keep evictions on ice until September.

The Federal Housing Finance Agency and the Federal Housing Administration today both announced they would each extend their eviction bans on borrowers of foreclosed properties. Other federal agencies are expected to follow suit.

““The pandemic continues to have an outsized impact on the ability of Americans to meet their monthly rent or mortgage payments. Today’s extension of the eviction moratorium protects particularly vulnerable Americans who otherwise would be at risk of losing a place to live,” said FHFA’s acting director, Sandra Thompson.

The Biden administration can no longer extend the Centers for Disease Control eviction ban without “clear and specific congressional authorization (via new legislation),” per a one-page opinion penned by Supreme Court Justice Brett Kavanaugh at the end of June.

“President Biden would have strongly supported a decision by the CDC to further extend this eviction moratorium to protect renters at this moment of heightened vulnerability,” said White House Press Secretary Jen Psaki. “Unfortunately, the Supreme Court has made clear that this option is no longer available.”

The CDC ban has also faced numerous legal challenges from property owners.

With renewing the CDC’s rule off the table, yesterday President Joe Biden called on the U.S. Departments of Housing and Urban Development, Agriculture, and Veterans Affairs to extend each of their own eviction bans. He also urged Congress to pass legislation to extend an eviction moratorium.

The same day, more than a dozen real estate trade associations sent a letter to the Senate, the U.S. Treasury and HUD, urging them to “reject further extensions” of a moratorium.

Unmoved, California Congresswoman Maxine Waters introduced a bill Thursday night that would extend the eviction moratorium through the end of the year. The effort would face steep opposition in the Senate. The New York Times reported that a voice vote in the Senate to extend the eviction moratorium is expected to fail.

Federal agencies’ foreclosure bans, however, will expire July 31 as planned. The White House last week announced a number of options for borrowers with federally-backed mortgages to reduce their monthly payments.

Most of the nation’s 44 million rental households are owned by private companies with sometimes complex financing from commercial banks and insurance companies. Thus the federal government is limited in the tools it has to control the nation’s rental market, compared with the single-family housing market.

Both the FHA and FHFA eviction ban extensions apply to their stock of foreclosed or real-estate owned (REO) properties.

FHA has 7.6 million outstanding loans, and in June, 14.2% were delinquent and 10.0% were seriously delinquent, according to an analysis of FHA Neighborhood Watch data by AEI Housing Center. The FHFA renewal on evictions would impact the 9,700 REO properties in the GSEs portfolio. 

Fannie Mae held $1.1 billion in REO properties, while Freddie Mac held $198 million in REO single-family properties at the end of 2020.

The majority of the single-family REO properties in Fannie Mae’s portfolio have no possibility of disposition, for now. Nearly 60% of those properties on Fannie Mae’s books were categorized as “unable to market” at the end of December, 2020, compared to 45% at the end of 2019.

The eviction moratorium on single-family REO foreclosures led to the 15 percentage-point increase, according to Fannie Mae’s latest annual report. Freddie Mac said in its 2020 annual report that the percentage of its REO properties had also “declined significantly” due to the foreclosure and eviction bans.

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