Since the start of the pandemic and COVID-19 mitigation measures, American homeowners have felt the effects of job loss, layoffs, furloughs, and other hardships related to coronavirus quarantine issues.
Many of those with FHA home loans, FHA refinances, and other loans have needed foreclosure avoidance measures due to this economic hardship brought.
Fortunately agencies like the FHA and HUD implemented many things for homeowners with FHA mortgages. Now the FHA announces some changes to the basic structure of the single-family home loan program to help these homeowners stay in their homes.
The FHA updated portions of its rulebook for single-family home loans; the changes will help lenders, “more quickly offer effective loss mitigation home retention options to borrowers in danger of losing their homes to foreclosure”.
These policy changes are also meant to make loss mitigation efforts run closer to those of the rest of the industry and “reduce barriers to servicing” FHA home loans.
“With these updates, we have strengthened the ability of servicers to reach and help more struggling borrowers with FHA-insured mortgages, more quickly,” according to the Principal Deputy Assistant Secretary for Housing Lopa Kolluri, who was quoted in the FHA press release.
Kolluri adds that these updates will ensure “quality servicing activities, streamline servicing requirements, more closely align our servicing policies with industry servicing practices, and improve outcomes.”
The FHA’s changes include a revised loan forbearance policy. It was created to help lenders “review struggling borrowers for a permanent FHA Home Affordable Modification Program (FHA-HAMP) home retention option” and it should be noted that this would come “without a lengthy forbearance” under the new guidelines.
Another change? Streamlined documentation requirements including the removal of signature requirements on Trial Payment Plans. This would, among other things, facilitate the plan being initiated without requiring an in-person signature.
There are also changes that alter the fee structure for “certain allowable costs” to make them similar to fee structures “used by other industry participants”.
These updates don’t reinvent the wheel–they include the changes FHA has already taken to support borrowers who are experiencing financial hardship due to COVID-19. Do you need help with your home loan?
If you do need assistance as the result of economic hardship, especially if it’s COVID-related, act as quickly as possible once you know you are in financial trouble and might miss a mortgage loan payment.
In spite of the announcements by the FHA and HUD about changes, assistance, and relief, action is still required by the borrowers themselves. FHA home loan relief is NOT automatic and you must contact your loan servicer to arrange for loss prevention or foreclosure avoidance measures. Act as soon as you can for best results.