FHA and HUD Announce Further Enhanced and Extended Foreclosure Relief
July 17, 2020
The COVID-19 updates from the FHA and HUD keep coming--it would be easy to mistake this article update for older announcements about foreclosure relief, but the ever-changing environment created by coronavirus and its containment measures requires government agencies to be flexible.
The latest measures announced by a new FHA mortgagee letter and press release are intended to further enhance the home owner’s ability to keep the home in spite of past financial difficulty.
FHA Mortgagee Letter 2020-22 announces improvements and the establishment of foreclosure avoidance possibilities the FHA is calling “Home Retention And Disposition options” to a variety of programs including:
The mortgagee letter states, “This suite of COVID-19Loss Mitigation Options will greatly assist borrowers impacted, directly or indirectly, by the COVID-19 pandemic and provide streamlined loss mitigation for borrowers and industry partners.”
The mortgagee letter announces specific, codified COVID-19 forbearance--this loan forbearance is intended for FHA borrowers “who experience an adverse impact on their ability to make on-time Mortgage Payments due to the COVID-19 pandemic”. The lender must respond with terms of one or more “periods of reduced or suspended payments without specific terms of repayment.”
The new COVID-19Home Retention Options allow the lender and borrower to agree on how to reinstate the mortgage following the period of loan forbearance. In cases where an FHA borrower is able to resume their monthly mortgage payments and where the FHA home loan was “current or less than 30 Days past due as of March 1, 2020” may be eligible for a series of loan options that include (but may not be limited to):
In cases where the borrower is not eligible for the above measures and cannot reinstate the mortgage, there are two options: the COVID-19 Pre-Foreclosure Sale(PFS);and the COVID-19 Deed-in-Lieu (DIL) of Foreclosure.
We will cover these options in detail in future articles. In cases where an FHA borrower must exercise one of these options, the lender is required to complete a Loss Mitigation Option for eligible Borrowers “no later than 90 days from the earlier of the date of completion or expiration of the COVID-19 Forbearance.”
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The latest measures announced by a new FHA mortgagee letter and press release are intended to further enhance the home owner’s ability to keep the home in spite of past financial difficulty.
FHA Mortgagee Letter 2020-22 announces improvements and the establishment of foreclosure avoidance possibilities the FHA is calling “Home Retention And Disposition options” to a variety of programs including:
- COVID-19 Owner-Occupant Loan Modification
- COVID-19 Combination Partial Claim and Loan Modification
- COVID-19 FHA-HAMP Combination Loan Modification / Partial Claim w/ Reduced Documentation
- COVID-19 Non-Occupant Loan Modification
- COVID-19 Pre-Foreclosure Sale (PFS)
- COVID-19 Deed-in-Lieu (DIL) of Foreclosure
The mortgagee letter states, “This suite of COVID-19Loss Mitigation Options will greatly assist borrowers impacted, directly or indirectly, by the COVID-19 pandemic and provide streamlined loss mitigation for borrowers and industry partners.”
The mortgagee letter announces specific, codified COVID-19 forbearance--this loan forbearance is intended for FHA borrowers “who experience an adverse impact on their ability to make on-time Mortgage Payments due to the COVID-19 pandemic”. The lender must respond with terms of one or more “periods of reduced or suspended payments without specific terms of repayment.”
The new COVID-19Home Retention Options allow the lender and borrower to agree on how to reinstate the mortgage following the period of loan forbearance. In cases where an FHA borrower is able to resume their monthly mortgage payments and where the FHA home loan was “current or less than 30 Days past due as of March 1, 2020” may be eligible for a series of loan options that include (but may not be limited to):
- COVID-19 Standalone Partial Claim
- COVID-19 Owner-Occupant Loan Modification
- COVID-19 Combination Partial Claim and Loan Modification
- COVID-19 FHA Home Affordable Modification Program (FHA-HAMP)
- Combination Loan Modification and Partial Claim with Reduced Documentation
- COVID-19 Non-OccupantLoan Modification (where applicable)
In cases where the borrower is not eligible for the above measures and cannot reinstate the mortgage, there are two options: the COVID-19 Pre-Foreclosure Sale(PFS);and the COVID-19 Deed-in-Lieu (DIL) of Foreclosure.
We will cover these options in detail in future articles. In cases where an FHA borrower must exercise one of these options, the lender is required to complete a Loss Mitigation Option for eligible Borrowers “no later than 90 days from the earlier of the date of completion or expiration of the COVID-19 Forbearance.”
------------------------------
RELATED VIDEOS:
Show Them You're Serious By Depositing Earnest Money
Homebuyers Benefit From the Work Done by Freddie Mac
Your Second Mortgage Is a Home Equity Loan
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