|HUD No. 20-102
HUD Public Affairs
July 8, 2020
FHA EXPANDS HOME RETENTION MEASURES FOR HOMEOWNERS FINANCIALLY IMPACTED BY COVID-19
Streamlined loss mitigation options will help more homeowners avoid foreclosure
WASHINGTON - The Federal Housing Administration (FHA) today announced additional home retention measures to help homeowners with FHA-insured single family mortgages who are financially impacted by the COVID-19 pandemic to bring their mortgage current at the end of their COVID-19 forbearance. Effective immediately, mortgage servicers will be able to use an expanded menu of loss mitigation tools, known as a â€śwaterfall,â€ť to assess homeownersâ€™ eligibility for other options to bring their mortgages current if they do not qualify for FHAâ€™s COVID-19 National Emergency Standalone Partial Claim. These options are available for homeowners whose mortgages were current or less than 30 days past due as of March 1, 2020.
â€śOur goal throughout this crisis has been to prevent American homeowners from losing their homes through no fault of their own,â€ť said HUD Secretary Ben Carson. â€śProviding more solutions now to save homes in the future is part of the Administrationâ€™s unprecedented response to the crisis and will contribute to the larger economic recovery already underway.â€ť
FHAâ€™s COVID-19 home retention waterfall for homeowners who occupy their FHA-insured single family residences now includes requiring servicers to assess homeowners for the following at or before the end of their forbearance period:
- The COVID-19 National Emergency Standalone Partial Claim takes all past due mortgage amounts and puts them in a separate, junior lien of up to 30 percent of the mortgageâ€™s unpaid principal balance. This junior lien is only repayable when the mortgage ends, which, for most borrowers, is when they refinance or sell their home.
- The COVID-19 Owner-Occupant Loan Modification is for homeowners who do not qualify for the COVID-19 Standalone Partial Claim. It modifies the rate and term of the existing mortgage.
- The COVID-19 Combination Partial Claim and Loan Modification is for homeowners who are not eligible for either of the first two solutions. It allows for the use of a partial claim up to 30 percent of the unpaid principal balance; any other amounts owed are handled through a mortgage modification.
- The COVID-19 FHA HAMP Combination Loan Modification and Partial Claim is for homeowners who are not eligible for any other home retention solution. It reduces the amount of documentation needed to obtain a COVID-19 FHA HAMP Combination Loan Modification and Partial Claim.
â€śThis comprehensive set of measures will help virtually every homeowner who has requested COVID-19 forbearance,â€ť said Acting Federal Housing Commissioner Len Wolfson. â€śIt also provides servicers with the tailored and streamlined capabilities they need to provide assistance to homeowners as quickly and as efficiently as possible.â€ť
For borrowers who do not currently occupy their FHA-insured single family property, FHA announced the COVID-19 Non-Occupant Loan Modification, which allows non-occupant borrowers who have received COVID-19 forbearance to obtain a modification to their mortgage rate and term. None of FHAâ€™s home retention measures, including those announced today, require a borrower to make a lump-sum payment at the end of the forbearance period. Additionally, servicers are not permitted to charge fees or penalties for missed mortgage payments while the borrower is in a forbearance period.