The Federal Housing Administration (FHA) on Friday, June 25 announced more measures to help homeowners with FHA-insured mortgages who are struggling financially due to the COVID-19 pandemic. These measures will provide additional, immediate relief while also expanding outreach and home retention options for struggling homeowners who are disproportionately people of color.
“Since President Biden took office, COVID-19 cases and deaths are down by nearly 90 percent, and the economy is rebounding strongly,” said Housing and Urban Development Secretary Marcia L. Fudge. “Importantly, 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. I am pleased that FHA is implementing additional measures to meet this unprecedented challenge and ensure a fair and equitable recovery.”
“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,” said Principal Deputy Assistant Secretary for the Federal Housing Administration Lopa Kolluri. “We will 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 Biden-Harris Administration and other federal agencies, FHA is extending its foreclosure and eviction moratoria for all FHA-insured single family mortgages, except vacant or abandoned properties, through July 31. This automatic extension is a one-month additional safeguard for those who are struggling to remain in their homes as the nation transitions from relief to recovery.
Further, FHA is continuing its extension of the deadline for first legal action and reasonable diligence timeframes for 180 days after July 31, to provide servicers with the additional time needed to focus their work on assisting distressed homeowners. This extension excludes vacant or abandoned properties.
Extended COVID-19 Forbearance Request Timeframes
To assist homeowners who remain at risk of falling behind on their mortgage payments due to COVID-19, FHA is extending the time period for homeowners to start new forbearance plans to Sept. 30. Homeowners who have not previously been in COVID-19 forbearance can request this pause or reduction in mortgage payments. The COVID-19 Forbearance for homeowners who newly request forbearance assistance between July 1, and Sept. 30, is for six months.
For homeowners who received a forbearance from their mortgage servicer between July 1, and Sept. 30, 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 is also introducing a new home retention option, the COVID-19 Advance Loan Modification (COVID-19 ALM). The COVID-19 ALM will offer significant payment relief to eligible homeowners.
The COVID-19 ALM will be offered to borrowers currently 90 or more days delinquent or at the end of their COVID-19 Forbearance. This new home retention option is for those homeowners whom a 30-year rate and term mortgage modification will bring the mortgage current and will reduce the Principal and Interest portion of their monthly mortgage payment by at least 25 percent.
Mortgage servicers must review their FHA servicing portfolio and offer the new COVID-19 ALM to distressed homeowners with FHA-insured mortgages who have faced a COVID-19 related hardship. To accept the modification, borrowers need to only sign and return the mortgage modification documents to their mortgage servicer.
All loss mitigation options will remain available to borrowers that do not accept the COVID-19 ALM for any reason. Borrowers who cannot make the modified mortgage payments with the COVID-19 ALM or who have other questions should reach out to their mortgage servicer to learn about other options that are available to them.
Home Equity Conversion Mortgage COVID-19 Extensions
To assist seniors with Home Equity Conversion (reverse) Mortgages (HECMs) who have been negatively affected by COVID-19, FHA is extending the ability for these homeowners to request an extension before the servicer may request the loan be called due and payable. For extension requests received between July 1, and Sept. 30, 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, and Sept. 30.
For all HECMs that received an extension between July 1, and Sept. 30, FHA is providing one additional three-month extension period if needed, when the homeowner requests this extension from their mortgage servicer.
Homeowners Seeking Assistance
FHA urges those who are behind on their mortgage payments or are having difficulty complying with the terms of their HECM, and have not yet contacted their mortgage servicer, to do so immediately. By contacting their servicer, homeowners can obtain a mortgage payment forbearance or a HECM extension. FHA also urges homeowners to engage with their mortgage servicer when their mortgage servicer contacts them about the new COVID-19 ALM or other loss mitigation home retention options.
Homeowners who are seeking more information on the options available to them should also consider contacting a HUD-approved housing counseling agency.
HUD is committed to removing barriers to homeownership for communities of color, persons with disabilities, and those with limited English proficiency. This includes removing long-standing barriers to obtaining fair housing. These communities have been disproportionately impacted by the COVID-19 pandemic, and HUD will continue to work to:
· Ensure that lenders and others in the real estate industry do not engage in practices that have an unjustified discriminatory effect on communities of color and other protected classes.
· Ensure that forbearance programs are actively and affirmatively marketed to those in the housing market area least likely to be aware of the options, least likely to apply, and to those that face barriers.
· Eliminate or reduce barriers for requesting forbearance.
· Ensure that lenders are aware of how anti-discrimination laws apply to communication with limited English proficient (LEP) households. As of HUD’s 2016 Limited English proficiency guidance, over twenty-five million persons in the United States - approximately nine percent of the population - have limited English proficiency.
· Ensure lenders understand their obligation to make reasonable accommodations for individuals with disabilities, including changes or exceptions to policies, practices, procedures, and services that may be necessary to provide equal opportunities and equal access for individuals with disabilities.
· Recognize that homeowners facing default may be vulnerable to foreclosure rescue scams that often target limited English proficient communities, and other communities of color.
· Ensure lenders are not discriminating in the maintenance and marketing of foreclosed properties. Lenders may not engage in substandard maintenance and marketing of foreclosed properties in communities of color, particularly while properly maintaining and marketing foreclosed properties in predominantly white communities.