The Federal Housing Administration (FHA) on Friday released a new informational notice on relief options for FHA-insured mortgage borrowers affected by the COVID-19 coronavirus pandemic, offering new guidelines specific to term mortgage borrowers while also aiming to ensure that reverse mortgage borrowers are aware of all the options available to them.

Reiterating the extension of loss mitigation options first introduced by the White House before being passed by the US Department of Housing and Urban Development (HUD) and FHA, the agency also announced new loss mitigation options made available specifically for term mortgage borrowers in conjunction with the publication. a new mortgage creditor letter (ML). The new ML revamps the “FHA COVID-19 recovery cascade” by streamlining previous FHA options for struggling homeowners.

This will help reduce the paperwork required and allow mortgage agents to offer a larger payment reduction to qualifying homeowners with single-family, Title II, FHA-insured term mortgages.

Options available for HECM borrowers

In a fact sheet reiterating the options available to reverse mortgage borrowers, FHA-insured HECM services are reminded that they are required to offer homeowners financially suffering from COVID-19 an extension when the owner requests such assistance. The FHA has extended the time limit for homeowners to request an extension from their mortgage agent until September 30, 2021.

The FHA also previously extended the maximum time limits allowed for COVID-19 extensions based on the date of the initial request. For all requested extensions made from March 1, 2020 to June 30, 2021, there is both an initial 6-month extension period and an additional extension period of up to another 6-month period for those who do. Requirement. For extensions requested between July 1 and September 30, 2021, the initial extension period of up to 6 months is all that is allowed. No additional six-month period is available for these borrowers.

In addition, no extension period as described by the FHA can extend beyond June 30, 2022 according to the fact sheet.

In guidelines specifically for reverse mortgage borrowers, the FHA implores that financially affected borrowers immediately contact their lending department if they require assistance through any of these featured extensions.

“The FHA urges those who are behind on their mortgage payments or are having difficulty complying with the terms of their reverse mortgage or home equity conversion mortgage (HECM) and have not yet contacted their mortgage agent , to do so immediately, ”the FHA said in its newly released fact sheet. “By contacting their repairer, homeowners can obtain a mortgage forbearance or an HECM extension. “

Recent relief

Late last month, the Joe Biden administration announced that a moratorium on foreclosures and evictions, which was set to expire at the end of June, would be extended for 30 days until July 31, 2021 in a series of announcements released by federal agencies, including the HUD, the Department of Veterans Affairs (VA), the United States Department of Agriculture (USDA) and the Consumer Financial Protection Bureau (CFPB) in conjunction with the White House.

Shortly after, HUD announced an extension of the moratorium on foreclosures and evictions for borrowers with FHA-insured single-family mortgages until July 31, as well as a further extension of the start dates. initial COVID-19 forbearance and HECM extension to provide additional COVIDs. -19 Abstention and HECM extension for certain borrowers. For HECM borrowers who remain negatively impacted by the effects of the pandemic, the FHA is further extending the timeline for these homeowners to request an extension of the status of a loan before a service agent can call it due and payable.

For HECM borrowers whose loans have already been declared due and payable by the manager, the owner’s extension requests must be approved by that manager for any delay related to the foreclosure, “and the submission of the application up to six months when the request is received between July 1, 2021 and September 30, 2021, ”explained the FHA in ML 2021-15.

For HECMs that have already received an extension anytime between July 1 and September 30, 2020, the FHA will provide a single additional three-month extension period if necessary, and more specifically if a borrower requests such an extension from the HECM. ‘Service Agent.

The HUD soon after extended an additional form of relief, this time to allow industry partners to take advantage of the flexible advice related to self-employment verification and rental income verification for loan programs. term mortgage and HECM for a single Title II family, according to ML 2021-16.

Duty officers praised the federal response

Since the initial moratoriums were imposed last March at the onset of the pandemic and the emergency declared by then-President Donald Trump, duty officers have widely praised the government’s efforts to support HECM borrowers throughout. emphasizing the need for lenders to communicate to their clients the importance of contacting their service agents if the relief available is required for their personal financial situation.

“When the COVID-19 forbearance was first issued in April 2020, we were all hoping the pandemic would be well under control long before now,” said Leslie Flynne, senior vice president of loans at Reverse Mortgage Solutions (RMS) to RMD in January after the Biden administration introduced its first forms of HECM relief. “The fact that it is now extended […] demonstrates that our borrowers are not immune to this virus and that the HUD is responding appropriately. “

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

“The FHA and mortgage agents have a common goal of helping as many homeowners as possible return to sustainable homeownership, and the FHA team will continue to closely monitor the performance of our loss mitigation options for s. ” ensure our policies successfully meet the needs of affected homeowners. by COVID-19, ”Joseph said in a statement.