President Joe Biden signed a resolution Monday to officially end the national emergency over the COVID-19 health crisis, drawing closer the end of pandemic-related forbearances for USDA and FHA mortgages.
The national emergency was first declared by then-President Donald Trump, who established provisions in March 2020. Loans backed by the U.S. Department of Agriculture (USDA) and Federal Housing Administration (FHA) had been eligible for COVID-specific forbearances since the spring of that year. In April 2020, the U.S. Department of Housing and Urban Development (HUD) published a letter outlining the terms of forbearance, as well as an extension period for holders of home equity conversion mortgages (HECMs) backed by the FHA.
Thus far, deadlines on such forbearances have been extended by both HUD and the USDA, with the most recent extension specifically tying the final dates to request forbearances and HECM extensions to the end of the presidentially declared national emergency. With the emergency set to end, the government agencies are winding down the program, with the deadline to request a forbearance now set at May 31.
HUD actually set the deadline for COVID-19 forbearance of FHA loans (or HECM extensions) last week. The USDA followed suit via email announcement on Monday, reasoning that extending the deadline to the end of May would provide a sufficient window past the end of the national emergency.
“As the national emergency may end earlier than originally expected, USDA has determined that a short period beyond the expiration of the COVID-19 national emergency would be beneficial to both USDA borrowers and servicers,” the USDA’s email read. “The USDA is extending the date by which a servicer may approve a borrower’s request for an initial COVID-19 forbearance.”