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Posted August 30th, 2019
FHA Strengthens Permanent Disaster Loss Options
The Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2019-14, Updates to FHAās Loss Mitigation Options for Borrowers in Presidentially-Declared Major Disaster Areas (PDMDA). This ML strengthens and expands FHAās loss mitigation options to homeowners located in all PDMDAs by adding new options and improving several existing options that were originally put in place in 2018 as temporary provisions for specific PDMDAs. Read todayās Press Release, issued by the Department of Housing and Urban Development (HUD), for more on the topic.
Effective immediately, FHA will now make permanent:
- The Disaster Standalone Partial Claim option to help eligible borrowers on a forbearance plan resume their pre-disaster mortgage payments and avoid payment shock;
- Streamlined income documentation and revised loss mitigation procedures for a Disaster Loan Modification option and Disaster Standalone Partial Claim option; and
- A Trial Payment Plan as an alternative to providing income documentation for these disaster loss mitigation options.
This ML is designed to provide immediate loss mitigation and other relief options to FHA borrowers in all PDMDAs and help them stay in their homes while mitigating losses to FHAās Mutual Mortgage Insurance Fund (MMIF). Further, the addition of these provisions to the Single Family Housing Policy Handbook 4000.1 creates clear and consistent policy applicable to borrowers whose FHA-insured property or place of employment is in a PDMDA.
Servicers may begin implementing these new policies immediately; however, they must begin implementing them no later than November 30, 2019.