The pandemic has forced many business owners, consumers, house hunters, and home sellers to rethink their approach to the task at hand. The FHA and HUD have modified many FHA loan rules to accommodate the need to socially distance and implement other coronavirus mitigation procedures and prevent the spread of the virus.
And in 2021, those modifications must continue.
On Tuesday, February 23, 2021, the HUD official site announced extensions of already-modified Single Family mortgage loan policies–modifications that would allow the FHA to help “maintain new mortgage originations for homebuyers and allow 203(k) rehabilitation projects to continue during the COVID-19 pandemic”.
Extending these policies insures continued flexibility in certain guidelines for single family home loans. Why is it needed? To ensure home loans are available via the FHA program for all applicants who qualify.
“The temporary policies we’re extending today allow lenders to continue originating and closing mortgages designated for FHA insurance endorsement during the pandemic and ensure critical home repairs in progress can be completed,”
That’s according to HUD Office of Housing and Federal Housing Administration Principal Deputy Assistant Secretary Lopa Kolluri, who was quoted in a HUD press release announcing the extended guidelines. The HUD official site says such temporary policies (listed below) remain in effect through June 30, 2021.
Two FHA mortgagee letters published on the same day as the press release announcing the details; the FHA is extending the following temporary policies. These are effective for Single Family Title II forward and Home Equity Conversion Mortgages also known as Reverse Mortgages:
- Use of an exterior-only appraisal scope of work originally announced in 2020, now extended to June 30, 2021
- FHA flexible policies regarding re-verification of employment, verification of self-employment income, and verification of rental income originally announced in 2020 now extended until June 30, 2021
The exterior-only appraisal helps appraisers socially distance, avoid gatherings, and exposing themselves and others to risks of infection.
The guidelines for lenders regarding employment verification make it possible for the lender to temporarily (until these measures are allowed to expire) verify employment without having to initiate in-person contact.
Other changes are happening, too–the FHA is also extending Single Family Title II forward 203(k) rehabilitation mortgage policy flexible guidelines associated with the administration of 203(k) Rehabilitation Mortgage Insurance Program escrow accounts for borrowers–this is a program for those in mortgage loan forbearance.
Not sure how these changes affect your transaction? Do you need to know more about how these policy changes may affect your loan? Contact your lender as soon as you can.