DS News

DS News January 2021

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

Issue link: http://digital.dsnews.com/i/1322815

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Page 81 of 99

80 to multifamily renters when the property owner received a forbearance. Fannie Mae also reminded homeowners that they are never required to repay missed payments all at once and shared tips to help homeowners avoid foreclosure fraud or scams. e GSE also announced a new COVID-19 payment deferral option to help homeowners ready to resume their monthly mortgage payments following a COVID-19 forbearance. MORATORIA EXTENSIONS EXPECTED IN EARLY 2021 Default servicing professionals expect the January 31 extension to be only the first step in extending some of the moratoria related actions taken in 2020, saying the extension is a stopgap to put any future decisions in the new administration's hands. "ere will be many difficult challenges coming out of COVID-19 for the new administration," said Roy Diaz, managing shareholder of Diaz, Anselmo, Lindberg P.A., and Chair of the Legal League 100, a professional association of U.S. financial services law firms. Diaz and several others believe the moratoria could be extended to at least March, marking a year since the first of them started. Even when the moratoria lifts, any progress for default servicing litigation will depend on various factors, not the least of which will be the pandemic's progress. Many government health experts don't expect the vaccines to affect the virus' direction until at least the second quarter, and probably not until mid-year. In addition to how to handle the moratoria, forbearances, etc., going forward, the administration and new Congress need to determine what relief, if any, they will try to provide for landlords of non-commercial properties. A majority of those landlords have their own mortgages on properties and count on rental income to pay the debt service, taxes, etc., on the property and provide additional income for themselves, Diaz said. As of this print deadline, moratoria for rental evictions are effective through January 31, 2021. "Further extensions and delays will depend on the policy positions taken by the new administration and the composition of the Senate, which would set the tone of what bills can get through to the President," Tony Van Ness said. Van Ness, who is Managing Attorney at Van Ness Law Firm, echoed many others' thoughts in law firms working in the default servicing business. "Although the FHFA has congressional oversight, in my opinion, they will issue extensions or mandates as they seem fit. Congress plays a role in the fact that the Heroes Act had provisions addressing foreclosure forbearance whereby several months would be automatically provided. If this bill passes next year, it could trigger mass forbearance holds outside of any moratorium." Some states and municipalities have moratoria that include properties not covered by the FHFA rules. Other states, like Florida, started moving forward with legal actions against payments in default. Van Ness added, "is is a tough time for all Americans, but just like the virus itself, there is not a specific timetable, and all you can do is prepare for the worst, hope for the best." According to Diaz, even if not forced to by moratoria, servicers will work hard to assist borrowers with payment plans, even if it means extending the length of the loans, agreeing to a payment of less than the total amount owed, lowering interest rates, or some combination. "Servicers will always prefer a performing loan to having to take back ownership of a property." However, Diaz acknowledged that there will still be a significant percentage of the loans that will go into default and will eventually need to go through the foreclosure process. MASSIVE COURT BACKLOGS at process will be significantly delayed. Once the moratoria lifts, default servicing companies and law firms supporting them will need to work through the backlog of foreclosures and related cases. How to handle these will be determined in part by whether they involve properties in judicial or in non- judicial states. In the 22 judicial foreclosure states, the "There will be many difficult challenges coming out of COVID-19 for the new administration." —Roy Diaz, managing shareholder of Diaz, Anselmo, Lindberg P.A. Cover Story

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