FHA Announces New HECM Relief for Seniors Affected by COVID-19
In December 2022, the FHA announced new options for mortgage relief for qualifying senior citizens trying to keep their homes while struggling with Home Equity Conversion Mortgage (HECM) loan payments or other related financial obligations.
One of the requirements of the FHA HECM program is that the borrower must remain current on all “property charges” such as property taxes and homeowner’s association dues.
Typically, a HECM borrower who does not stay current on these charges could face loss of the home if they do not meet their financial obligations in these areas. But a new FHA program is working to provide another option for homeowners.
The new FHA COVID-19 HECM Property Charge Repayment Plan allows participating FHA lenders, “to offer eligible homeowners up to five years to repay property charges, such as taxes and homeowners insurance” and allows the lender to provide “advances on the homeowner’s behalf” when the borrower can’t make the payment themselves.
“For senior homeowners, recovering from the financial effects of the pandemic may be especially challenging,” according to Federal Housing Commissioner Julia Gordon, who was quoted in the press release.
Gordon adds that this new option ”...will give more seniors behind on their property charges the opportunity to fulfill the obligations of their HECM and remain in their homes.”
Without the relief plan, a borrower could risk having the entire HECM loan declared due and payable when the property taxes or other obligations are not met.
Under the plan, FHA HECM borrowers may be offered a repayment plan regardless of the dollar amount of property charge payments owed.
They may be offered a repayment plan up to 60 months and it can be offered for up to a full year following any declared end to the COVID-19 National Emergency according to HUD.gov.
To qualify for this option, borrowers must submit documentation showing they were financially affected by COVID-19.
If you are not sure how this new COVID-19 relief option might work for you or under what circumstances you may become eligible for it, contact your loan servicer as soon as possible. If you are already on some form of a repayment plan you may also qualify for the plan discussed above. Do not assume you don’t qualify just because you are already in a different repayment program.
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