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HUD: Extra Relief for Borrowers With FHA-Insured Mortgages

FHA mortgage holders – including those with a reverse mortgage – have temporary eviction protection in place and tools to help at-risk families keep their home.

WASHINGTON – The Department of Housing and Urban Development (HUD) announced Thursday that the Federal Housing Administration (FHA) will offer a tailored set of mortgage relief options to homeowners with FHA-backed mortgages affected by the COVID-19 pandemic and unable to make their payments.

Mortgage servicers may give deferred or reduced payment options to FHA borrowers facing financial hardship for six months, and options could also be extended to an additional six months of forbearance if requested by eligible borrowers.

The FHA guidelines are part of the stimulus package signed into law March 27, the Coronavirus Aid, Relief, and Economic Security Act (CARES). That law requires banks to extend to borrowers with federally backed mortgages up to 12 months of forbearance if facing a coronavirus-related financial hardship.

“The last thing any of us wants is for Americans to lose their homes unnecessarily while we continue to fight this invisible enemy,” HUD Secretary Ben Carson said in a statement. “If you’re struggling, immediate help is now available. The FHA will continue to work with stakeholders to ensure that the loss mitigation options that are offered for both forward and reverse borrowers are appropriately tailored for the present situation.”

The FHA also announced a new program that will allow borrowers who do take part in the forbearance to hold off on paying the full amount accumulated during their forbearance period until the mortgage is paid off.

The COVID-19 National Emergency Partial Claim is an option that can take effect when the forbearance period ends. The partial claim will help eligible homeowners who have been granted forbearance reinstate their loans by authorizing servicers to advance funds on behalf of homeowners. Borrowers who are given an interest-free subordinate mortgage will not have to pay it off until their first mortgage is paid off.

FHA is also authorizing a foreclosure moratorium for Home Equity Conversion Mortgages (HECMs, often called reverse mortgages). It provides reverse mortgage guidance in a letter, ML 2020-04.

The FHA also provides an extensive list of FAQs (frequently asked questions) on its website.

Homeowners struggling to make their mortgage payments are urged to contact their mortgage servicer to discuss options.

Source: “HUD Announces Additional Relief for FHA-Insured Mortgagees,” National Mortgage Professional (April 2, 2020) and “FHA Rolls Out New Mortgage Relief Options Amid Coronavirus Outbreak,” HousingWire (April 2, 2020)

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