Time Is Running Out to Apply for FHA Loan COVID-19 Relief
The Department of Housing and Urban Development has issued a final deadline of May 31, 2023, for both FHA purchase loans and FHA Home Equity Conversion Mortgages, also known as FHA HECMs.
Homeowners with FHA mortgages who experienced pandemic-related financial hardship could apply for relief through FHA loan forbearance options offered during the pandemic. Since then, the federal government and the World Health Organization have declared an end to the pandemic.
A Brief History of COVID-Related FHA Loan Relief
On April 1, 2020, HUD published Mortgagee Letter 2020-06, the Forbearance for Borrowers Affected by the COVID-19 National Emergency (COVID-19 Forbearance) and an Extension Period for HECMs Affected by the COVID-19 National Emergency.
This established the policy for COVID-19 procedures related to FHA loan default and foreclosure. Borrowers were offered alternatives to foreclosure if they could show pandemic-related financial hardship.
Multiple Deadline Changes
Along the way, the FHA and HUD extended COVID-19 forbearance deadlines multiple times.
At one point, there was a degree of uncertainty about how long COVID-19 relief could be provided; HUD announced the end of relief one day, announced extensions to that final deadline later on, but ultimately the end of this relief program would be tied to the formal end of the pandemic.
The final deadline to apply for FHA loan forbearance related to COVID was established; May 31, 2023, was the final day to apply.
That one last extension was “intended to provide affected Borrowers ample time to request a COVID-19 Forbearance or HECM Extension, and for Mortgagees to offer and process these requests.”
The Final Countdown
The FHA and HUD have extended the application deadline until May 31, 2023, “to align COVID-19 Forbearance and HECM Extension requests with the monthly billing cycle.” Borrowers approved for this relief could expect the lender to waive late charges, penalties, and related fees as long as the borrower complies with the forbearance program.
May 31, 2023, is NOT the day forbearance programs will end. It is simply the deadline for applications. After the last day in May, no COVID-19-related loan forbearance applications are accepted, and there must be no loan forbearance period beyond November 30, 2023, according to HUD.gov.
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