FHA And HUD Announce Streamlined Foreclosures Aid
The FHA and HUD have announced simplified mortgage relief for those in need of help due to the COVID-19 pandemic.
Those with FHA mortgages have a new “FHA COVID-19 Recovery Waterfall” that “streamlines and revises the FHA’s previous options for troubled homeowners, reduces the documentation required, and enables mortgage servicing providers for eligible FHA-insured homeowners Single family titles grant a higher cut in payment II Forward Mortgages, ”according to the official website of the HUD.
“This next step in the FHA’s evolution of the COVID-19 response is a significant and meaningful way to help homeowners who are at critical point in their recovery in the coming months and moving from forbearance to permanent sustainable payments.” “The words of FHA Deputy Assistant Secretary Lopa Kolluri quoted in the press release.
Adds Kolluri, “We can help more homeowners who, through no fault of their own, continue to experience the financial ramifications of the pandemic and cannot make their prior mortgage payments. In order for many of these homeowners to stay in their homes, a greater reduction in payments is urgently needed. “
What kind of streamlined measures are these? According to a HUD press release dated July 23, 2021, they include:
Independent partial claim to restore COVID-19:
This measure is intended for FHA borrowers who are ready to resume their mortgage payments. Homeowners who can resume ongoing mortgage payments.
HUD’s COVID-19 Recovery Standalone Partial Claim allows “mortgage arrears to be placed in a zero interest subordinated lien on the property that is repaid on termination of the mortgage,” typically at the time the homeowner refinances or sells the home.
FHA home loan COVID-19 recovery modification
This is for those who, as the official HUD website says, “can not“Make their Current Monthly Mortgage Payments” This COVID-19 recovery modification “extends the life of the mortgage to 360 months at a fixed rate and aims to reduce the borrower’s monthly principal and interest portion of their monthly mortgage payment”.
According to the HUD, this change must include a partial claim if the homeowner has funds for partial claims.
The COVID-19 advance credit modification Mod
The HUD allows the use of these optimized options, if appropriate, “together with the FHA COVID-19 Advance Loan Modification (COVID-19 ALM) in front of the waterfall announced on June 25, 2021”. This loan modification option requires that mortgage service providers review their client lists and offer this relief to eligible homeowners.
“Homeowners who choose to accept the COVID-19 ALM just have to check and sign and return the mortgage modification documents sent to them by their mortgage administrator, ”said HUD.gov.
Lenders are allowed to begin offering these new options “as soon as operationally possible,” but these options must be made available to FHA borrowers within 90 days.
“The FHA and the mortgage service providers share a common goal of helping as many homeowners as possible return to sustainable home ownership,” said Julienne Joseph, FHA Assistant Assistant Secretary for Single Family Homes, also quoted in the HUD press release, and added added: “… the FHA team will continue to closely monitor the performance of our mitigation options to ensure that our policies successfully meet the needs of homeowners affected by COVID-19.”