Quantcast

The FHA and HUD have announced new guidelines for borrowers who are applying for FHA mortgages and have had previous mortgage forbearance. Since the start of the global pandemic, these agencies have offered borrowers mortgage relief to help offset new financial burdens.

FHA Rates Near 50 Year Low!

Now is the time to drop the interest rate on your 30-year mortgage or refinance into a 15-year home loan.

FHA Rates for October 20, 2020
Are You Watching Your Credit Score?

NOTICE: Some FHA mortgage lenders are substantially raising FICO score requirements during the Coronavirus crisis, even though FHA minimums remain unchanged.


- Improving Your Credit Score Has Never Been More Important -

Get started one
Get started two
Get started three
Get started four
FHA.com is a privately owned website, is not a government agency, and does not make loans.

Choose a Loan Type

FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA and HUD Announce New FHA Home Loan Approval Rules

September 26, 2020

FHA and HUD Announce New FHA Home Loan Approval Rules
The FHA and HUD have announced new guidelines for borrowers who are applying for FHA mortgages and have had previous mortgage forbearance. Since the start of the global pandemic, the FHA and HUD have offered borrowers mortgage relief to help offset the financial burden of coronavirus lockdown measures.

Such relief has been temporary in nature, but the new rules announced by the FHA indicate a permanent modification to certain FHA loan rules related to how the lender is to approve new mortgage loan applications for borrowers who have applied for home loan forbearance in the past.

FHA Mortgagee Letter 2020-20, FHA Underwriting Guidelines for Borrowers with previous Mortgage Payment Forbearance, announces alterations to FHA’s underwriting guidelines for mortgages “involving Borrowers who were granted a Previous Mortgage Forbearance on the subject property or other residence.”

What do the new guidelines tell the lender about home loan approval in such cases?
The new rules are dependent on “successful completion of the Forbearance” and acknowledges that even after such loan forbearance, “there may be the need and the opportunity for the borrower to refinance the existing mortgage to a lower interest rate,thereby lowering the monthly mortgage payment,or to a shorter term.” Furthermore, some borrowers may need to find a new home rather than simply refinancing the old one.

There are several sections of the new rules worth examining--we’ll explore them in detail in another article, but one of the most important aspects of the new rules states that a borrower who was offered a home loan forbearance, “...and continues to make payments as agreed under the terms of the original Note” is not considered a delinquent borrower for the purposes of applying for a new mortgage.

This is true in cases where the loan forbearance agreement is terminated at or prior to closing day. Different types of home loans may feature different requirements, here is an example of some of those from the FHA/HUD press release--those eligible for this type of mortgage relief qualify when:
 
  • The borrower continued to make regularly scheduled payments and the forbearance program has ended.
  • FHA Cash-Out refinances require the borrower to complete the Forbearance Plan and must have made at least 12 consecutive monthly payments after the forbearance ends.
  • For Purchase and No Cash-Out refinances, the borrower must have completed the Forbearance Plan and made at least three consecutive monthly payments once the forbearance is over.
  • For Credit Qualifying Streamline refinance, the borrower must have completed the Forbearance Plan and made less than three consecutive monthly payments after the forbearance.
These are not the only guidelines--check the FHA/HUD official site fore more information on forbearance rules that may apply specifically to you. The new rules mentioned here must be implemented for FHA mortgage loans with case numbers assigned on or after November 9, 2020.

------------------------------

RELATED VIDEOS:
Let's Talk About Home Equity
Understanding Your Loan Term
Your Home Loan is Called a Mortgage

SEE YOUR CREDIT SCORES   From All 3 Bureaus  

Do you know what's on your credit report?

Learn what your score means.


GET STARTED