FHA Announces Updates to Home Loan Rules
May 6, 2021
Many Americans have needed foreclosure avoidance measures due to economic hardship brought on by the global pandemic. The FHA and HUD have announced many steps to help homeowners with FHA mortgages keep their homes; the latest actions from the agency are designed to further help.
The FHA is revising portions of its rulebook for single family home loans to streamline and update policies that help homeowners avoid foreclosure.
The rule changes are intended to help lenders, “more quickly offer effective loss mitigation home retention options to borrowers in danger of losing their homes to foreclosure.”
The end result of the updates make loss mitigation efforts more consistent with the rest of the industry and the changes are meant to “ reduce barriers to servicing” FHA home loans.
“With these updates, we have strengthened the ability of servicers to reach and help more struggling borrowers with FHA-insured mortgages, more quickly,” said Principal Deputy Assistant Secretary for Housing Lopa Kolluri, who was quoted in the FHA press release, adding, “The updates to our policies will ensure quality servicing activities, streamline servicing requirements, more closely align our servicing policies with industry servicing practices, and improve outcomes.”
The FHA’s changes include, but may not be limited to:
Borrowers who need help with their homes as a result of economic hardship should act as quickly as possible when they realize they may miss a payment. FHA home loan relief is NOT automatic and even with the policy changes announced by the FHA a borrower must still contact their loan servicer to arrange for loss prevention or foreclosure avoidance measures.
Borrowers should know that the more payments missed, the fewer options they have to retain the home--it is key that you act as soon as possible even if you have missed payments to avoid going into foreclosure.
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The FHA is revising portions of its rulebook for single family home loans to streamline and update policies that help homeowners avoid foreclosure.
The rule changes are intended to help lenders, “more quickly offer effective loss mitigation home retention options to borrowers in danger of losing their homes to foreclosure.”
The end result of the updates make loss mitigation efforts more consistent with the rest of the industry and the changes are meant to “ reduce barriers to servicing” FHA home loans.
“With these updates, we have strengthened the ability of servicers to reach and help more struggling borrowers with FHA-insured mortgages, more quickly,” said Principal Deputy Assistant Secretary for Housing Lopa Kolluri, who was quoted in the FHA press release, adding, “The updates to our policies will ensure quality servicing activities, streamline servicing requirements, more closely align our servicing policies with industry servicing practices, and improve outcomes.”
The FHA’s changes include, but may not be limited to:
- A revised loss mitigation policy allowing lenders to “review struggling borrowers for a permanent FHA Home Affordable Modification Program (FHA-HAMP) home retention option” without a lengthy forbearance.
- Streamlined documentation requirements including the removal of signature requirements on Trial Payment Plans.
- A revised fee structure for “certain allowable costs” similar to fee structures “used by other industry participants.”
Borrowers who need help with their homes as a result of economic hardship should act as quickly as possible when they realize they may miss a payment. FHA home loan relief is NOT automatic and even with the policy changes announced by the FHA a borrower must still contact their loan servicer to arrange for loss prevention or foreclosure avoidance measures.
Borrowers should know that the more payments missed, the fewer options they have to retain the home--it is key that you act as soon as possible even if you have missed payments to avoid going into foreclosure.
------------------------------
RELATED VIDEOS:
Get to Know HUD
Your HUD-1 Settlement Statement
Protect Yourself Against Identity Theft
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