The Federal Housing Administration (FHA) announced more measures to help homeowners struggling financially due to the COVID-19 pandemic.
“Since President Biden took office, COVID-19 cases and deaths are down by nearly 90 percent, and the economy is rebounding strongly,” Housing and Urban Development (HUD) Secretary Marcia Fudge said in a release. “Importantly, we must continue to take action to ensure that those who may have experienced hardships brought on by COVID-19 have the support they need to remain in their homes.”
In line with other federal agencies, FHA has automatically extended its single-family foreclosure and eviction moratorium another month for all FHA-insured single-family mortgages, except vacant or abandoned properties, through July 31, 2021.
FHA is also continuing its extension of the deadline for first legal action and reasonable diligence timeframes for 180 days after July 31, 2021, to provide servicers with the additional time needed to focus their work on assisting distressed homeowners. This extension excludes vacant or abandoned properties.
In addition, the agency also extended its COVID-19 forbearance request timeframes. Homeowners now have until Sept. 30, 2021, to start new forbearance plans. Homeowners who have not previously been in COVID-19 forbearance can request this pause or reduction in mortgage payments. The COVID-19 forbearance for homeowners who newly request forbearance assistance between July 1, 2021, and Sept. 30, 2021, is for six months.
For homeowners who received a forbearance from their mortgage servicer between July 1, 2020, and Sept. 30, 2020, FHA is providing one additional three-month forbearance extension for those who need and request additional time to recover financially before resuming mortgage payments.
The new pandemic help includes a new home retention option called the COVID-19 Advance Loan Modification (COVID-19 ALM). The COVID-19 ALM will be offered to borrowers currently 90 or more days delinquent or at the end of their COVID-19 forbearance. This new home retention option is for homeowners whom a 30-year rate and term mortgage modification will bring their mortgage current and will reduce the principal and interest portion of their monthly mortgage payment by at least 25 percent.
Mortgage servicers must review their FHA servicing portfolio and offer the new COVID-19 ALM to distressed homeowners with FHA-insured mortgages who have faced a COVID-19 related hardship. To accept the modification, borrowers need to sign and return the mortgage modification documents to their mortgage servicer.
All loss mitigation options will remain available to borrowers that do not accept the COVID-19 ALM for any reason. Borrowers who cannot make the modified mortgage payments with the COVID-19 ALM or who have other questions should reach out to their mortgage servicer to learn about other options that are available to them.
Additionally, the new assistance includes Home Equity Conversion Mortgage (HECM) COVID-19 extensions to help seniors with reverse mortgages who have been negatively affected by COVID-19. FHA is extending the ability for these homeowners to request an extension before the servicer may request the loan be called due and payable. For extension requests received between July 1, 2021, and Sept. 30, 2021, servicers must grant homeowners an extension of up to six months.
For HECM homeowners with loans that have already been called due and payable, servicers must approve homeowner requests for an extension for any deadline related to foreclosure and claim submission of up to six months when the request is received between July 1, 2021, and Sept. 30, 2021.
For all HECMs that received an extension between July 1, 2020, and Sept. 30, 2020, FHA is providing one additional three-month extension period if needed, when the homeowner requests this extension from their mortgage servicer.