FHA Reviewing COVID-19 Assistance Options for Reverse and Forward Mortgage Borrowers

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The Federal Housing Authority (FHA) on Friday released a new advisory on options to help FHA-insured mortgage borrowers hit by the COVID-19 coronavirus pandemic, offering new guidance for forward mortgage borrowers, while also aiming to ensure that reverse mortgage borrowers are aware of everything available to them. options.

Confirming the expansion of the loss mitigation options first presented by the White House before they were adopted by the US Department of Housing and Urban Development (HUD) and the FHA, the agency also announced new loss mitigation options that will be available specifically for forward mortgage borrowers along with the publication … a new pledgee letter (ML). The new ML will reorganize the COVID-19 FHA Recovery Waterfall, streamlining previous FHA options for homeowners in need.

This will help reduce the amount of paperwork required and allow mortgage servicing companies to provide greater benefit reductions for eligible homeowners with FHA-insured single-family forward mortgages.

Options available to HECM borrowers

In a fact sheet confirming the options available to a reverse mortgage borrower, FHA-insured HECM service providers are reminded to offer homeowners financially affected by COVID-19 an extension when a homeowner requests such assistance. The FHA has extended the deadline for homeowners to request an extension from their mortgage service until September 30, 2021.

The FHA has also previously extended the maximum time limit for COVID-19 renewals based on the date of the original request. For all requested renewals made from March 1, 2020 to June 30, 2021, there is both an initial renewal period of 6 months and an additional renewal period to another period of 6 months for those who request it. For renewals requested between July 1 and September 30, 2021, only an initial renewal of up to 6 months is allowed. There is no additional six month period for such borrowers.

In addition, according to the fact sheet, the renewal period as specified by the FHA cannot be extended beyond June 30, 2022.

In a guide specifically for canceling mortgage borrowers, the FHA urges financially affected borrowers to contact their lender immediately if they require assistance under one of these described extensions.

“The FHA urges those who are delaying mortgage payments or are having difficulty complying with the terms of a reverse or home equity conversion (HECM) mortgage and have not yet contacted their mortgage servicing authority to do so immediately,” the FHA said in a statement. his recently published newsletter. “By contacting their caregivers, homeowners can get a deferred mortgage payment or HECM renewal.”

Recent relief

Late last month, the Joe Biden administration announced that the foreclosure and eviction moratorium, which expires at the end of June, will be extended for another 30 days until July 31, 2021 in a series of announcements issued by federal agencies including HUD, Department of Veterans Affairs (VA), USDA (USDA) and the Consumer Financial Protection Bureau (CFPB) in conjunction with the White House.

Shortly thereafter, HUD announced an extension of the divestiture and eviction moratorium for FHA-insured single-family mortgage borrowers until July 31, and further extension of the initial COVID-19 waiver and HECM extensions to provide additional COVIDs – 19 Tolerance and HECM Extension for Certain Borrowers. For HECM borrowers who continue to be negatively impacted by the pandemic, the FHA is expanding the schedule for such homeowners so that they can request an extension of the loan before the maintenance staff can call it payable.

For HECM borrowers with loans whose maturity has already been announced by the service agent, homeowner’s renewal requests must be approved by that service agent for any foreclosure deadline, “and filing a claim for up to six months if the request is received between 1 July 2021 and September 30, 2021 ”, FHA. explained in ML 2021-15.

For HECMs that have already received an extension anytime between July 1 and September 30, 2020, FHA will provide an additional three-month extension period if necessary, and in particular if the borrower requests such an extension from the service provider.

Shortly thereafter, HUD expanded an additional benefit form, this time to provide industry partners with the additional flexibility to check self-employment and single-family rental income checks, Title II forward mortgages and HECM programs, according to ML 2021-16

Service Services Approved Federal Government Response

Since the initial moratoriums were introduced last March with the onset of the pandemic and emergency announced by then President Donald Trump, service companies have largely praised the government’s efforts to support HECM borrowers, while emphasizing the need for lenders to communicate to their clients the importance of contacting their service providers. if available assistance is required for their personal financial situation.

“When the COVID-19 abstinence statement was first released in April 2020, we all hoped the pandemic would be well controlled long before that,” said Leslie Flynn, senior vice president of loan services at Reverse Mortgage Solutions (RMS). before RMD in January after the Biden administration submitted its initial HECM relief forms. “The fact that it has now been extended […] demonstrates that our borrowers are not at risk from this virus and HUD is responding accordingly. ”

HUD and FHA remain adamant that they will continue to monitor the evolving pandemic and provide assistance as needed, according to Julienne Joseph, FHA Deputy Assistant Secretary for Single Family Housing.

“The FHA and Mortgage Services have a common goal of helping as many homeowners as possible return to sustainable home ownership, and the FHA team will continue to closely monitor the effectiveness of our mitigation options to ensure that our policies successfully meet the needs of affected homeowners. from COVID-19, ”Joseph said in a statement.

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