On Wednesday, April 1, the Federal Housing Administration published Mortgagee Letter 2020-06 to implement the mortgage forbearance provisions provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that President Trump signed into law on March 27, 2020.
Mortgagee Letter 2020-06 extends certain due and payable, foreclosure and claim timeframes for Home Equity Conversion Mortgage borrowers affected by the COVID-19 national emergency.
ML 2020-06 allows the borrower to request from the Mortgagee a six-month extension on having the loan being called due and payable. If needed, an additional period of up to six months may be approved by HUD. The term of either the initial or the extended extension period may be shortened at the borrower’s request. The Mortgagee must waive all late charges, fees, and penalties, if any, as long as the borrower is in an extension period.
For HECMs that have become automatically due and payable, entered into a deferral period, or became due and payable with HUD approval, the Mortgagee may also take an automatic extension for any deadline relating to foreclosure and claim submission for a period of up to six months. If needed, an additional period of up to 6 months may be approved by HUD.
The mortgagee letter also informs servicers of the use of the new COVID-19 loss mitigation tools for borrowers impacted by the national emergency in place of the guidance on Presidentially-Declared Major Disaster Areas in FHA’s Single Family Housing Policy Handbook 4000.1.
The Mortgagees must implement all other procedures set forth in this ML no later than April 30, 2020, but may begin using the new procedures immediately. Mortgagees may approve the initial COVID-19 Forward Forbearance or HECM Extension Period no later than October 30, 2020.
FHA announced these policy changes in FHA Info #20-24 and said it would continue to review its policies in its efforts to provide servicers with the tools needed to assist homeowners with FHA-insured mortgages with even more flexibilities/relief efforts during this national emergency.
Information for Mortgagees and Borrowers
The FHA Single Family COVID-19 Q&A for mortgagees and other interested parties in FHA has been updated and is available on the Single Family main page on hud.gov.
FHA has launched a new consumer-oriented Q&A to help homeowners better understand what loss mitigation options are available to them during this national emergency. It is available on the Loss Mitigation Services for FHA Homeowners page on hud.gov.
FHA’s Office of Single Family Housing plans to develop a webinar that focuses on the COVID-19-related loss mitigation options available to assist borrowers since the CARES Act became effective. Details about the upcoming webinar will be communicated at a future date.
Quick Links (You should use a different web browser if you encounter issues opening documents in Internet Explorer)
- View Mortgagee Letter 2020-06 and all other archived Mortgagee Letters at: https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee
- Access the HUD Press Room at: https://www.hud.gov/press
- Access the Single Family Housing Policy Handbook 4000.1 in online or portable document format from HUD’s Client Information Policy Systems (HUDCLIPS) Handbooks web page at: https://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh
- View the FHA COVID-19 Q&A on the Single Family main page on hud.gov at: https://www.hud.gov/program_offices/housing/sfh
- Access the Loss Mitigation Services for FHA Homeowners consumer page on hud.gov at: https://www.hud.gov/program_offices/housing/sfh/nsc/lossmit