Earlier this week, President Joe Biden announced an extension of the moratorium, previously slated to end March 31, on home foreclosures for federally backed mortgages through the end of June.
The coordinated effort among the Department of Housing and Urban Development (HUD), Department of Veterans Affairs, and Department of Agriculture (USDA) aims to "deliver immediate relief for American families bearing the brunt of the COVID-19 crisis," according to a statement from the White House.
Some industry organizations have endorsed the move while other insiders say they have concerns.
The real estate trade group National Association of Realtors (NAR) issued support for the extension in a press release, its President Charlie Oppler commended the Biden administration's efforts to protect millions of vulnerable homeowners.
"This decision not only provides security of shelter to those at risk of foreclosure, but also offers critical stability in the broader U.S. housing market," Oppler said. "We look forward to working with the White House as these efforts continue and as the nation emerges from the grip of COVID-19 with vaccination efforts underway."
The Mortgage Bankers Association echoed support.
Bankrate Chief Financial Analyst Greg McBride called the action "critically important."
"The year-long forbearance initially afforded through the CARES Act seemed sufficient at the time, but the pandemic and its economic fallout is dragging on far longer than had been expected," McBride said. "The 6 months’ of additional forbearance—available in 3-month increments—reflects the reality that long-term unemployment will be an ongoing issue even once the pandemic is behind us and the economy begins to reopen."
Critics of the move include the President of Gryphon USA, Richard Kruse, who said the extension "undermines the vitality of the nation's housing market as health and economic conditions that prompted the federal policy begin to subside."
"The unprecedented federal interference into the private housing market due to the COVID-19 pandemic certainly stabilized the shelter of Americans in a healthcare emergency which is positive," Kruse said. "However, extension of the foreclosure ban beyond the March 31 expiration fails to recognize the success of social distancing and vaccination programs against the initial emergency policy."
While Bankrate's McBride says actions to extend forbearance and foreclosure moratoriums "benefit renters whose landlords are getting relief on their federally-backed mortgages from these provisions.”
Kruse countered that the extension only addresses half of the problem and keeps landlords in the dark regarding how to seek the cash flow to pay their mortgages and maintenance costs.
In a press release by the USDA, the department commented on its own collaboration and effort to address "an almost unprecedented housing affordability crisis in the United States" and stated the "need to do more."
Deputy Under Secretary for Rural Development Justin Maxson added, "The Biden Administration is working closely with Congress to pass the American Rescue Plan to take more robust and aggressive actions to bring additional relief to American families and individuals impacted by the pandemic.”