In addition to a foreclosure extension, owners with an FHA home loan now have forbearance extension options and can find help via FHA’s new outreach program.
WASHINGTON – On Friday, the Federal Housing Administration (FHA) announced more measures to help homeowners with FHA-insured mortgages who are struggling financially due to the COVID-19 pandemic. These measures provide additional, immediate relief, while expanding outreach about home retention options for struggling homeowners.
“We must continue to take action to ensure that those who may have experienced hardships brought on by COVID-19 have the support they need to remain in their homes,” says Housing and Urban Development (HUD) Secretary Marcia L. Fudge.
“These measures are important steps we need to take to ensure that the individuals and families that continue to struggle financially due to COVID-19 have access to effective and meaningful recovery options,” adds FHA Principal Deputy Assistant Secretary Lopa Kolluri, saying FHA will also “continue to assess additional solutions to help homeowners in distress keep their homes and avoid future foreclosure where possible.”
Extended single family foreclosure and eviction moratoria
In conjunction with the president and other federal agencies, FHA extended its foreclosure and eviction moratoria for all FHA-insured single family mortgages, except vacant or abandoned properties, through July 31, 2021.
FHA also continued its deadline extension for a first legal action and reasonable diligence timeframes for 180 days after July 31, 2021. It says that will give servicers additional time to focus on assisting distressed homeowners. The extension excludes vacant or abandoned properties.
Extended covid-19 forbearance request timeframes
FHA extended the time period for homeowners to start a new forbearance plan to Sept. 30, 2021, so those who haven’t previously applied for COVID-19 forbearance can request a pause or reduction in mortgage payments. The COVID-19 Forbearance for homeowners who newly request assistance between July 1, 2021, and Sept. 30, 2021, is for six months.
For homeowners who received a forbearance from their mortgage servicer between July 1, 2020, and September 30, 2020, FHA is providing one additional three-month forbearance extension for those who need and request additional time to recover financially before resuming mortgage payments.
COVID-19 advance loan modification
FHA also introduced a new home retention option – the COVID-19 Advance Loan Modification (COVID-19 ALM) – which could offer significant payment relief to eligible owners.
The COVID-19 ALM will be offered to borrowers who are 90 or more days delinquent or at the end of their COVID-19 forbearance. It’s directed at owners who have a 30-year rate and term mortgage modification, and will bring the mortgage current and reduce the principal and interest portion of their monthly mortgage payment by at least 25%.
Mortgage servicers must now review their FHA servicing portfolio and offer the new COVID-19 ALM to distressed homeowners who qualify. To accept the modification, borrowers simply need to sign and return the mortgage modification documents to their mortgage servicer.
Failure to accept the ALM doesn’t cancel out other loss mitigation options. Borrowers who cannot make the modified mortgage payments with the COVID-19 ALM or have other questions should contact their mortgage servicer to learn about other options.
Home Equity conversion mortgage COVID-19 extensions
To assist seniors with Home Equity Conversion (reverse) Mortgages (HECMs), FHA extended their ability to request an extension before the servicer may request the loan be called due and payable. For extension requests received between July 1, 2021, and Sept. 30, 2021, servicers must grant homeowners an extension of up to six months.
For HECM homeowners with loans that have already been called due and payable, servicers must approve homeowner requests for an extension for any deadline related to foreclosure and claim submission of up to six months when the request is received between July 1, 2021, and Sept. 30, 2021.
For all HECMs that received an extension between July 1, 2020, and September 30, 2020, FHA is providing one additional three-month extension period if needed, providing the homeowner requests an extension from their mortgage servicer.
FHA urges all at-risk homeowners to contact their servicers immediately if they haven’t already done so. They can also consider contacting a HUD-approved housing counseling agency.
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