The Federal Housing Administration (FHA) has expanded the COVID-19 Recovery Options for all borrowers in default or imminent default, including non-occupant borrowers, regardless of the reason for default. If you are experiencing a financial hardship impacting your ability to make on-time mortgage payments, contact your mortgage servicer as soon as possible to discuss your options.
COVID-19 Loss Mitigation
FHA offers COVID-19 Recovery Options to borrowers who are on a COVID-19 Forbearance, or borrowers who did not participate in a COVID-19 Forbearance who are 90 days or more delinquent through October 30, 2024.
For details on COVID-19 Loss Mitigation visit COVID-19 Recovery Loss Mitigation Options For FHA Homeowners.
HUD's Standard Loss Mitigation Options
Through its National Servicing Center (NSC), FHA offers a number of loss mitigation programs and informational resources to assist FHA-insured homeowners facing financial hardship, and whose mortgage is either in default or at risk of default. Those homeowners should contact their mortgage servicer who will evaluate them for one of FHA's loss mitigation options.
If you have an FHA-insured mortgage, these options may be available to you.
Informal or Formal Forbearance Plan: A Forbearance plan allows a borrower to work with their mortgage servicer to temporarily pause or reduce their monthly mortgage payments and may provide specific terms for repayment.
Special Forbearance (SFB)-Unemployment: SFB is available when one or more of the borrowers have become unemployed and this loss of employment has negatively affected the borrower's ability to continue to make their monthly mortgage payment. The servicer will re-evaluate the borrower for a permanent Loss Mitigation Option to cure a Default once the borrower is gainfully employed and/or the SFB-Unemployment Agreement expires.
FHA Home Affordable Modification Program (HAMP): All FHA-HAMP Options are temporarily suspended through October 30, 2024, except for non-borrowers who acquired title through an exempted transfer. All other borrowers must be evaluated for the COVID-19 Recovery Home Retention Options. FHA-HAMP is designed to help a borrower who meets HAMP eligibility requirements to avoid foreclosure by establishing an affordable monthly mortgage payment to a level sustainable by the borrower's current income through the use of one of the following:
- Standalone Loan Modification: Resolves the outstanding mortgage payment arrearages by adding it to the principal loan balance of the first mortgage and extends the term of the mortgage to 360 months at a fixed interest rate.
- Standalone Partial Claim: Allows mortgage payment arrearages to be placed in a zero-interest subordinate lien against the property. The Partial Claim amount does not require payment until the last mortgage payment is made, the loan is refinanced, or the property is sold, whichever occurs first.
- FHA-HAMP Combination Loan Modification and Partial Claim: The FHA-HAMP Combination Loan Modification and Partial Claim establishes an affordable monthly payment, resolves the outstanding mortgage payment arrearages, and permanently modifies the first mortgage monthly payment. The Partial Claim is a zero-interest subordinate lien that will include a portion of the amount to be resolved and if you meet the requirements, a principal deferment. The remainder is added to the principal loan balance of your first mortgage and extends the term for 30 years (360 months) at a fixed interest rate.
Pre-Foreclosure Sale (PFS): Standard PFS is temporarily suspended and must not be offered through October 30, 2024, except for non-borrowers who acquired title through an exempted transfer. All other eligible borrowers must be evaluated for the COVID-19 PFS. If the borrower does not qualify for any of the FHA Home Retention Options and the property sales value is not enough to pay the loan in full, the servicer may be able to accept less than the full amount owed by approving eligible borrowers for a Pre-Foreclosure Sale, also known as a short sale.
Deed-in-Lieu (DIL) of Foreclosure: Standard DIL is temporarily suspended and must not be offered through October 30, 2024, except for non-borrowers who acquired title through an exempted transfer. All other eligible borrowers must be evaluated for the COVID-19 DIL. If the borrower is unable to complete a PFS transaction at the expiration of the PFS marketing period, they may be able to voluntarily offer to deed ("give back") the property to HUD in exchange for a release from all obligations under the Mortgage.
CONTACT FHAFHA staff are available to help answer your questions and assist you to better understand your options as an FHA borrower under these loss mitigation programs. There are several ways you can contact FHA for more information, including: