Key Highlights
- Mortgage servicers to use expanded eligibility assessment tools to bring mortgages current if homeowner doesn’t qualify for COVIC-19 National Emergency Standalone Partial Claim, according to the FHA
- Tool options available for homeowners with mortgages that current or less than 30 days past due as of March 1
- GSE’s announced 16,738 foreclosure prevention actions during April, according to FHFA’s latest Foreclosure Prevention & Refinance Report
The Federal Housing Authority (FHA) just announced more “home retention measures” to help COVID-19 impacted owners with FHA single-family mortgages to bring their mortgage current at the end of their forbearance term. Known as “waterfall,” these mortgage servicer eligibility assessment tools are intended to help homeowners who do not qualify for the FHA’s COVID-19 National Emergency Standalone Partial Claim make good on their mortgages “at or before the end” of their forbearance period.
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- The COVID-19 National Emergency Standalone Partial Claim puts all past due mortgage amounts in a separate, junior lien of up to 30% of the unpaid principal balance. The junior lien becomes payable only when the mortgage ends either, for most borrowers, when the mortgage is refinanced or the house is sold.
- The COVID-19 Owner-Occupant Loan Modification modifies the rate and term of the existing mortgage and is only eligible for those who don’t qualify for the Standalone Partial Claim.
- The COVID-19 Partial Claim and Loan Modification allows for a partial claim up to 30% of the unpaid balance and is only available to homeowners who do not qualify for #1 or #2 above.
- The COVID-19 FHA HAMP Combination Loan Modification and Partial Claim reduces the amount of paperwork and documentation needed to obtain it. It is only available to homeowners who do not qualify for #1, #2, or #3.
None of these newly announced tools require a borrower to make a lump-sum payment at the end of a forbearance period AND servicers are not allowed to charge any fees of penalties for missed mortgage payments during the forbearance period.
Non-occupant borrowers may also receive forbearance to modify their mortgage rate and term under the COVID-19 Non-Occupant Loan Modification.
Go to either https://www.hud.gov or https://www.hud.gov/espanol for more information.
ALSO!, the FHA announced that Fannie and Freddie are extending the loan origination flexibilities listed below until August 31 from July 31:
- Alternative appraisals on purchase and rate term refinance loans
- Alternative methods for documenting income and verifying employment prior to loan closing
- Expanding the use of power of attorney and remote online notarizations to assist with loan closings.
One last data point in the FHFA’s latest Foreclosure Prevention & Refinance Report…GSEs completed 16,738 foreclosure prevention actions during April including 4,528 permanent loan modifications and a spike in initiated forbearance plans that brought the total number of loans in forbearance plans to 1.14M or approximately 4.1% of the total loans serviced.
Thanks to https://www.hud.gov/press/press_releases_media_advisories/HUD_No_20_102 and to DSnews.
Also read: Sales of New Homes Soared +55% Annually in June, No Lump Sum Repayments Required When Fannie & Freddie Forbearance Periods End, Podcast: Breaking News, 1031 Tax Exchanges Under Fire | Major Cities Brace For 2021 Correction | Tim and Julie Harris
