Not to downplay the pending foreclosures and evictions faced by millions of families, but the current national furor is a bit overblown.
The possibility of losing your home is not to be taken lightly, for sure. But foreclosures and evictions are not events, but processes. And in some cases, they could take months or even years.
Let's look at evictions first. The Centers for Disease Control and Prevention has reinstituted a ban on evictions. The original moratorium expired July 31, but now tenants are relatively safe until Oct. 3. If the new order stands up to legal challenges, it will cover communities experiencing a surge in COVID-19 cases -- meaning about 80% to 90% of the country.
Either way, evictions are not instantaneous; they take time. Your landlord can't just move your stuff to the street at will. He or she has to follow state and local laws, which can vary widely.
Let's look at Massachusetts as an example. If you have been unable to pay your rent, your landlord must first send you a 14-day "Notice to Quit" your tenancy. The notice will set a court date, at which time you can present a written response stating why you should not be evicted. If you lose the case, you have 10 days to file an appeal and request a new hearing.
Even if you lose again, you can't be removed until 10 days after the judge issues an eviction order. Then you must receive written notice of the eviction at least 48 hours in advance. If my math is correct, this gives a renter in the Bay State a 36-day cushion.
Foreclosures usually take longer -- much longer. Once a mortgage is 90 days past due, the loan is considered in default. At that point, the lender issues a notice of default that says foreclosure proceedings will commence in 90 days if payments are not brought up to date by then.
That gives you three months to make good. If you fail, the lender can petition the court to auction the property at foreclosure, and that step could give you even more time before you can be evicted.
In jurisdictions that allow nonjudicial foreclosures, filing the necessary paperwork is all that's needed to get the ball rolling. But even in West Virginia -- currently the state with the fastest foreclosure process, according to credit reporting company Experian -- it still takes 48 days, on average, to complete the process.
If you live in a state that requires judicial foreclosures, the process could take substantially longer because of backlogs. And some states, Experian says, have consumer protection laws that further prolong the proceedings. In Arizona, the state with the lengthiest foreclosures, the entire process takes more than five years.
None of this is to say someone facing eviction should take that possibility lightly. Rather, they should get on their horse and do whatever they can to save their home. That includes contacting a federally approved housing counselor to help navigate the process.
But act quickly. The Private Equity Stakeholder Project has found tens of thousands of incidents in which corporate landlords and private equity firms have moved against tenants, even when the initial eviction moratorium was in place.
For tenants, the Consumer Financial Protection Bureau (cfpb.gov) has a rental assistance finder that tenants can use to locate aid. And the Eviction Lab at Princeton University (evictionlab.com) has a list of more than 600 community resource organizations working to prevent evictions. If you can afford it, you might want to consult an attorney.
For financially strapped homeowners, Uncle Sam is offering new ways for borrowers to get back on track. Currently, they apply only to borrowers whose loans are touched by the federal government in some way, but other lenders often follow suit.
Here is some of the help now available:
-- In addition to traditional loss-mitigation options, the Federal Housing Administration is now requiring servicers who administer FHA-insured loans to offer zero-interest subordinate liens to eligible homeowners who are able to resume their existing mortgage payments. If you cannot do so, the servicer can extend the term of a mortgage to 360 months at market rate and target a 25% principal and interest reduction.
-- The Veterans Administration will purchase borrowers' past-due payments and unpaid principal, subject to certain limits. In some cases, the agency will lower a borrower's payments by 20%. The deferred indebtedness will become a junior lien that won't accrue interest and will not require monthly payments. It will become due only when the property is sold or the loan is paid off.
-- The Rural Housing Service now permits a 20% reduction in a borrower's monthly payments and offers a combination of interest rate reduction, term extension and mortgage recovery advance.
-- Fannie Mae and Freddie Mac have extended the moratorium on booting occupants from properties they have acquired through foreclosure or deed-in-lieu-of foreclosure transactions, but only until Sept. 30. Their conservator, the Federal Housing Finance Board, is also encouraging landlords of rental properties financed by mortgages touched by Fannie and Freddie to apply for emergency rental assistance before starting an eviction process.
If you think you qualify for any of these options, move quickly. The system is likely to be strained to the limit as loan servicers struggle to work with the millions of owners facing foreclosure.
Ben Graboske, president of data-crunching firm Black Knight, put it this way: "The operational challenge this represents is staggering."