In addition to providing new forbearance options for forward mortgage borrowers who continue to be affected by the ongoing COVID-19 coronavirus pandemic, the Federal Housing Administration (FHA) announced on Monday that home equity conversion mortgages (HECMs) borrowers will receive additional relief are from previous actions, but also certain forward and reverse mortgage borrowers who are newly affected by problems and uncertainties related to the pandemic. This emerges from the publication of the Mortgagee Letter (ML) 2021-24.
One way to achieve this goal is for the new guidelines to attempt to reconsider the relief period granted, saying that pre-established six month relief periods may not have been sufficient, especially for those recently hit by the economic turmoil that the pandemic continues to cause.
New (and old) relief
The FHA and the US Department of Housing and Urban Development (HUD) are continuing to review pandemic aid guidelines to ensure that mortgage borrowers have sufficient opportunities to mitigate the financial hardship caused by the pandemic in addition to the risk involved with Mutual Mortgage Insurance (MMI) Fund said the ML.
Previously, with the publication of ML 2020-06 in April 2020, the FHA had announced an extension of the foreclosure and eviction moratorium for borrowers with FHA-insured single-family mortgages for a further period until summer 2021, as well as a further extension of the start dates of the first COVID-19- Forbearance and HECM renewals to provide additional COVID-19 forbearance and HECM renewals to certain borrowers.
“HUD has extended the deadlines for the approval of a first COVID-19 forbearance and the HECM extensions several times, most recently to September 30, 2021, until ML 2021-15,” says the new guideline. “This ML only provided for a COVID-19 forbearance or HECM extension for a period of six months if requested between July 1, 2021 and September 30, 2021. In addition, HUD is known that some borrowers may be newly affected and may receive relief. need the end of the national COVID-19 emergency. “
Since the pandemic continues to affect forward and reverse mortgage borrowers, not least due to the highly contagious Delta variant of the virus, the agency has recognized an additional need for less restricted relief.
Additional relief phase, the emergency timetable
For borrowers who filed an additional deferral request between July 1 and September 30, 2021, an additional six-month deferral period will be granted for forward mortgage borrowers. The new reverse mortgage relief is following a similar path, according to ML.
“The HUD also offers an additional period of up to six months for a COVID-19 HECM extension if the first extension request was made between July 1, 2021 and September 30, 2021,” the ML says. This ML also sets out an initial COVID-19 grace period or an HECM extension for up to six months if requested between October 1, 2021 and the end of the national COVID-19 emergency. Additionally, this ML offers an additional COVID-19 forbearance or HECM extension period of up to six months if the original COVID-19 forbearance or HECM extension is exhausted and expires during the national COVID-19 emergency. “
The national COVID-19 state of emergency, originally declared by former President Donald Trump in March 2020, has been in effect since then and it doesn’t appear that President Joe Biden will make any changes to the nation’s state of emergency anytime soon. However, some additional insights into the emergency timetable can be obtained from the revisions of the new ML to the manual for single-family homes 4000.1.
“No COVID-19 grace period may extend beyond six months after the end of the national COVID-19 emergency or September 30, 2022, whichever occurs later,” says the new addition.
As before for due and payable HECMs, homeowners renewal requests must be approved by that servicer for any deadline related to foreclosure. However, for those HECM borrowers who submitted their first exemption request between October 1, 2020 and June 30, 2021, an additional six month extension period cannot be extended beyond June 30, 2022, their applications between July 1 and June 30, 2022 September 30, 2021, the grace period may not extend beyond September 30, 2022.
The full policy for those filing their application between October 1, 2021 and the end of the national COVID-19 emergency will allow an affected borrower to apply for an additional six month extension period that the mortgagee must approve, the ML says . An additional period of six months can be requested by the borrower and approved or used by the mortgagee if some conditions are met.
These are when “the HECM has used a full six months of the initial COVID-19 renewal period; and the initial COVID-19 extension period expires on or before the end of the national COVID-19 emergency, ”the ML reads. “No COVID-19 extension period may extend beyond six months after the end of the national COVID-19 emergency or September 30, 2022, whichever occurs later. The maximum COVID-19 extension period for these HECMs is 12 months. “
Other reverse mortgage measures recently taken by the FHA as described in the publication of previous MLs and informational releases include Adding submissions for reverse mortgage evaluations on the agency’s “Catalyst” software platform; the Issue of new waivers for HECM borrowers affected by the pandemic; and a renewal an eviction moratorium.
Read Mortgage letter 2021-24 at HUD.