December 2, 2021

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FHA And HUD Announce Streamlined Foreclosure Relief


The FHA and HUD have announced mortgage relief streamlined for those who need assistance as a result of the COVID-19 pandemic.

Those with FHA mortgages have a new “FHA COVID-19 Recovery waterfall” which “streamlines and revises FHA’s previous options for struggling homeowners, reduces required documentation, and allows mortgage servicers to provide greater payment reduction for eligible homeowners with FHA-insured Single Family Title II forward mortgages” according to the HUD official site.

“This next step in the evolution of FHA’s COVID-19 response is a significant and meaningful way to help those homeowners who will be at a critical point in their recovery in the coming months and transitioning out of forbearance to permanent sustainable payments,” which are the words of FHA Principal Deputy Assistant Secretary Lopa Kolluri, who was quoted in the press release.

Kolluri adds, “We can help more homeowners who, through no fault of their own, continue to feel the financially impacts of the pandemic and are unable to make their previous mortgage payment amount. Deeper payment reduction is greatly needed for many of these homeowners to stay in their homes.”

What are these streamlined measures? According to a HUD press release issued on July 23, 2021, they include but may not be limited to:

COVID-19 Recovery Standalone Partial Claim:

This measure is meant for FHA borrowers who are able to resume their mortgage payments. homeowners who can resume making their current mortgage payments.

HUD’s COVID-19 Recovery Standalone Partial Claim allows “mortgage payment arrearages to be placed in a zero interest subordinate lien against the property that is repaid when the mortgage terminates”, normally at the time when the homeowner refinances or sells the home.

FHA Home Loan COVID-19 Recovery Modification

This is for those who, as the HUD official site states, “cannot” make their current monthly mortgage payments” This COVID-19 Recovery Modification “extends the term of the mortgage to 360 months at a fixed rate and targets reducing the borrower’s monthly principal and interest portion of their monthly mortgage payment”.

According to HUD, this modification must include a Partial Claim if the homeowner has Partial Claim funds available.

The COVID-19 Advance Loan Modification

HUD permits the use of these streamlined options, where appropriate, to be used “in tandem with the pre-waterfall FHA COVID-19 Advance Loan Modification (COVID-19 ALM) announced on June 25, 2021″. That loan modification option requires mortgage servicers review their client lists and offer this relief to eligible homeowners.

“Homeowners who choose to accept the COVID-19 ALM need to only review and sign and return the mortgage modification documents sent to them by their mortgage servicer” according to


Lenders are permitted to start offering these new options, “as soon as operationally feasible” but these options must be made available to FHA borrowers within 90 days.

“FHA and mortgage servicers have a shared goal of helping as many homeowners as possible to return to sustainable homeownership” says FHA Deputy Assistant Secretary for Single Family Housing Julienne Joseph, also quoted in the HUD press release, adding, “…the FHA team will continue to monitor closely the performance of our loss mitigation options to ensure that our policies successfully meet the needs of homeowners impacted by COVID-19”.

Joe Wallace - Staff Writer

By Joe Wallace

July 26, 2021

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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