HUD Announces New CARES Act FHA Home Loan Relief
If you have an FHA mortgage, refinance loan, or One-Time Close construction mortgage and are experiencing financial hardship as a result of the COVID-19 outbreak, you may qualify for certain relief measures including those announced in this latest HUD action. What kind of relief may be available to you?
Effective April 1, 2020, borrowers with a financial hardship that makes them unable to pay their mortgage due to the COVID-19 National Emergency should contact their loan servicers to ask about loan forbearance options; the new HUD requirements state:
“...mortgage servicers must extend deferred or reduced mortgage payment options - called forbearance - for up to six months, and must provide an additional six months of forbearance if requested by the borrower.”
You Must Work With Your Lender
Note the VERY IMPORTANT last line in that statement; “...if requested by the borrower.” You must contact your lender or loan servicer. Do not skip payments or assume any payments are suspended, delayed, or otherwise modified unless you have spoken to someone at your financial institution about your legally binding loan contract first.
The press release on the HUD official site includes a quote from HUD Secretary about the motivation for this latest coronavirus economic relief effort. "The last thing any of us wants is for Americans to lose their homes unnecessarily while we continue to fight this invisible enemy. If you're struggling, immediate help is now available.”
A New FHA Partial Claim Option
The FHA and HUD have also announced a measure known as the COVID-19 National Emergency Partial Claim. This can be used with the previously mentioned COVID-19 FHA Loan Forbearance period comes to an end.
A “partial claim” helps qualifying borrowers (who were authorized COVID-19 National Emergency loan forbearance) to “reinstate their loans by authorizing servicers to advance funds on behalf of homeowners” according to HUD.
A partial claim delays the repayment of those advances “through an interest-free subordinate mortgage that the borrower does not have to pay off until their first mortgage is paid off”.
We will discuss these measures in greater detail in the coming days, but in the meantime it is key that all FHA borrowers know they should contact their loan servicers at the first indication that there may be difficulty making mortgage payments. The longer you wait to do so, the fewer your options for saving the home are. Do not delay.
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