Since the global coronavirus pandemic began affecting the United States economy, HUD has made a variety of policy changes and loss mitigation measures available to borrower struggling to make mortgage payments on FHA mortgages, refinance loans, and even reverse mortgages.
In April, 2020, HUD published Mortgagee Letter 2020-06. That letter announced measures including COVID-19 related loan forbearance, plus “Standalone Partial Claims”, plus an extension of the deadline for FHA Reverse Mortgages (also known as FHA Home Equity Conversion Mortgages or HECM) for those affected by the pandemic.
A few months later, HUD also announced loan forbearance options for those who needed it beyond the initial forbearance period.
And now, the Department of Housing and Urban Development and the Federal Housing Administration have announced that the agencies recognize a need, “…to extend the deadline for approving a COVID-19 Forbearance or a HECM Extension” beyond the deadlines announced previously.
That’s why HUD has announced that borrowers “directly or indirectly” affected by COVID-19 who are struggling with FHA Reverse Mortgages now have forbearance and forbearance extension options open to them. There is also relief for those who are struggling with “forward mortgages” or new purchase loans (see below).
The new deadlines have been revised from the previously issued October 30, 2020 date. Now an FHA HECM or Reverse Mortgage borrower has these options available until December 30, 2020. The same goes for those who seek relief for FHA loans used to purchase a home.
HUD states that, effective immediately, the new deadline for participating FHA lenders to approve the initial COVID-19 Forward Forbearance or HECM Extension Period is extended to no later than December 31, 2020.
Naturally, the pandemic could affect the new deadlines–there is always the possibility of having the new December deadline extended into the new year (2021), but that remains to be seen.
Borrowers experiencing financial trouble during the pandemic should reach out to their loan servicers as soon as possible to make arrangements and discuss loan forbearance options.
Loan forbearance is not automatic and if you have not made arrangements with your financial institution you may have little to no protection against home loan default and foreclosure.