The Federal Housing Administration (FHA) announced further measures on Friday June 25th to help homeowners with FHA-insured mortgages who are in financial difficulties due to the COVID-19 pandemic. These measures will provide additional, immediate relief while expanding the reach and home maintenance options for struggling homeowners who are disproportionately colored people.
“Since President Biden took office, COVID-19 cases and deaths have decreased by nearly 90 percent and the economy is recovering strongly,” said Marcia L. Fudge, Minister for Housing and Urban Development. “What is important is that we must continue to take steps to ensure that those who may have experienced difficulties caused by COVID-19 receive the support they need to stay in their homes. I am pleased that the FHA is implementing additional measures to meet this unprecedented challenge and ensure a fair and equitable recovery. “
“These measures are important steps we must take to ensure that individuals and families who continue to experience financial difficulties due to COVID-19 have access to effective and meaningful recovery options,” said Lopa Kolluri, the federal housing administration’s deputy chief secretary. “We will continue to explore additional solutions to help homeowners in need keep their homes and avoid future foreclosures where possible.”
Extended foreclosure and eviction moratoriums for a family
Working with the Biden-Harris Administration and other federal agencies, the FHA is extending its foreclosure and eviction moratoriums on all FHA-insured single-family mortgages, excluding vacant or abandoned properties, through July 31. This auto-renewal is a month-long extra coverage for those struggling to stay in their homes as the nation moves from emergency relief to recovery.
Additionally, the FHA is extending the legal action deadline and reasonable due diligence by 180 days after July 31st to give service providers the extra time they need to focus their work on helping homeowners in need. This extension excludes vacant or abandoned properties.
Extended timeframe for COVID-19 forbearance inquiries
To help homeowners who remain at risk of defaulting on their mortgage payments due to COVID-19, the FHA is extending the deadline for homeowners to start new deferral plans to September 30th. Homeowners who have not previously been under COVID-19 omission can request this interruption or reduction in mortgage payments. The COVID-19 forbearance for homeowners who apply for a new forbearance assistance between July 1st and September 30th is valid for six months.
For homeowners who received a deferral from their mortgage administrator between July 1st and September 30th, FHA is offering an additional three month deferral extension for those who need and request additional time to recover financially before making the mortgage payments again take up.
COVID-19 advance loan modification
The FHA is also introducing a new home preservation option, the COVID-19 Advance Loan Modification (COVID-19 ALM). The COVID-19 ALM will offer eligible homeowners significant payment relief.
The COVID-19 ALM is offered to borrowers who are currently 90 days or more in arrears or at the end of their COVID-19 forbearance. This new home keep option is for homeowners whose 30 year mortgage amendment will bring the mortgage up to date and reduce the principal and interest portion of their monthly mortgage payment by at least 25 percent.
Mortgage service providers need to review their FHA service portfolio and offer the new COVID-19 ALM to distressed homeowners with FHA-insured mortgages who have faced COVID-19 hardship. To accept the change, borrowers just need to sign the mortgage modification documents and send them back to their mortgage servicer.
Borrowers who for any reason do not accept the COVID-19 ALM will have all loss limitation options available. Borrowers who cannot make the modified mortgage payments with the COVID-19 ALM or have other questions should contact their mortgage service provider for information on other options available to them.
COVID-19 extensions for home conversion mortgages
To assist seniors with Home Equity Conversion (reverse) mortgages (HECMs) who have been negatively impacted by COVID-19, FHA is expanding the ability for these homeowners to request an extension before the servicer can request that the loan be due and payable is. For extension requests received between July 1st and September 30th, servicers must grant homeowners an extension of up to six months.
For HECM homeowners with loans already due and payable, servicers must approve homeowner’s requests for extension of a deadline related to foreclosure and filing for up to six months after the request is received between July 1 and September 30.
For all HECMs that received an extension between July 1st and September 30th, FHA will offer an additional three month extension period if required if the homeowner requests that extension from their mortgage servicing company.
Homeowners Looking For Help
The FHA urges those who are in arrears with their mortgage payments or are having difficulty complying with the terms of their HECM and who have not yet contacted their mortgage administrator to do so immediately. By contacting their manager, homeowners can obtain a mortgage deferral or HECM extension. The FHA also urges homeowners to contact their mortgage administrator if their mortgage administrator contacts them about the new COVID-19 ALM or other home loss mitigation options.
Homeowners looking for more information about the options available to them should also consider contacting a HUD-approved housing counseling center.
HUD is committed to removing home ownership barriers for communities of color, people with disabilities and people with limited English language skills. This also includes removing long-standing barriers to the preservation of fair living space. These communities are disproportionately affected by the COVID-19 pandemic and HUD will continue to work on it:
· Ensure that lenders and others in the real estate industry are not engaging in practices that have an unjustified discriminatory effect on color communities and other protected classes.
· Ensure that forbearance programs are actively and positively marketed to those in the housing market area who are least familiar with the options, least likely to be and who are facing obstacles.
· Remove or remove barriers to asking forbearance.
· Make sure lenders understand how anti-discrimination laws apply to communicating with households with limited English proficiency (LEP). According to the 2016 HUD Guideline on Limited English Proficiency, over 25 million people in the United States – approximately nine percent of the population – have limited English proficiency.
Ensure that lenders understand their obligation to provide reasonable accommodation for people with disabilities, including changes or exceptions to policies, practices, procedures and services that may be required to provide equal opportunities and access to people with disabilities.
Realize that homeowners facing late payments can be vulnerable to foreclosure rescue scams that often target communities with limited English and other colored communities.
· Ensure that lenders are non-discriminatory in the maintenance and marketing of foreclosures. Lenders must not engage in the inadequate maintenance and marketing of foreclosed properties in colored communities, especially while properly maintaining and marketing foreclosed properties in predominantly white communities.