In addition to offering new forbearance options to term mortgage borrowers who continue to be affected by the ongoing COVID-19 coronavirus pandemic, the Federal Housing Administration (FHA) announced on Monday that mortgage borrowers from Home Equity Conversion (HECM) will benefit from additional relief extending from previous measures, but which also explains that some term and reverse mortgage borrowers find themselves newly affected by the problems and uncertainties caused by the pandemic. This is according to the publication of the Mortgage Creditor’s Letter (ML) 2021-24.
One of the ways the new guidelines attempt to achieve this goal is to revisit the period of relief provided, claiming that the previously demarcated six-month relief periods may have been insufficient, especially for those who find themselves recently affected by the economic turmoil that the pandemic continues to cause. .
New (and old) relief
The FHA and the U.S. Department of Housing and Urban Development (HUD) continue to review policies related to pandemic relief to ensure mortgage borrowers have enough options to ease the financial hardship caused by the pandemic, in addition to managing the associated risk. to the Mutual Mortgage Insurance Fund (MMI), said ML.
Previously, with the release of ML 2020-06 in April 2020, the FHA announced an extension of the moratorium on foreclosures and evictions for borrowers with single-family mortgages insured by the FHA for an additional period until summer 2021, as well as a further extension of the start. dates of the initial COVID-19 forbearance and HECM extension to provide additional COVID-19 forbearance and HECM extension to certain borrowers.
“The HUD has repeatedly extended the approval timelines for an initial COVID-19 forbearance and HECM extensions, most recently through September 30, 2021, through ML 2021-15,” the new guide says. This ML has only provided a six month period for a COVID-19 forbearance or HECM extension when requested between July 1, 2021 and September 30, 2021. Additionally, HUD understands that some borrowers may be newly affected and may need relief via the end of the national COVID-19 emergency.
As the pandemic continues to impact term and reverse mortgage borrowers in large part due to the highly contagious Delta variant of the virus, an additional need to provide less strained relief was recognized by the agency.
Additional relief period, emergency schedule
An additional six-month forbearance period for term mortgage borrowers will be granted to borrowers who applied for additional forbearance between July 1 and September 30, 2021. New reverse mortgage relief is on track similar, according to ML.
âThe HUD also offers an additional period of up to six months for a COVID-19 HECM extension when the initial extension request was made between July 1, 2021 and September 30, 2021,â the ML said. âThis ML also establishes an initial COVID-19 forbearance period or an HECM extension of up to six months upon request between October 1, 2021 and the end of the national COVID-19 emergency. In addition, this ML provides for an additional period of COVID-19 forbearance or HECM extension of up to six months if the COVID-19 forbearance or the initial HECM extension is exhausted and expires during the national COVID emergency. -19. “
The COVID-19 national emergency, which was originally declared by former President Donald Trump in March 2020, has since been in effect and it does not appear that President Joe Biden will make any changes to the country’s emergency position in the near future. However, additional information on the emergency schedule can be gleaned from the revisions made by the new ML to the Single Family Housing Handbook 4000.1.
“No COVID-19 forbearance period can extend beyond six months after the end of the national COVID-19 emergency or September 30, 2022, whichever is later,” the new addition said.
As before for HECMs with due and payable status, owner’s extension requests must be approved by this duty officer for any foreclosure related deadline. However, for HECM borrowers who will have made their initial request for relief between October 1, 2020 and June 30, 2021, an additional six-month extension period cannot now be extended beyond June 30, 2022. Newly affected borrowers who applied between July 1 and September 30, 2021, the additional period cannot go beyond September 30, 2022.
The comprehensive policy for those who apply for relief between October 1, 2021 and the end of the national COVID-19 emergency allows an affected borrower to request an additional six-month extension period that the mortgagee must approve, we read in the ML. An additional six month period may be requested by the borrower and be approved or taken by the mortgagee if a few conditions are met.
These are if âthe HECM used a full six months of the initial COVID-19 extension period; and the initial COVID-19 extension period will expire at the latest at the end of the national COVID-19 emergency, âthe ML read. âNo COVID-19 extension period can extend beyond six months after the end of the national COVID-19 emergency or September 30, 2022, whichever is later. The maximum COVID-19 extension period for these HECMs is 12 months. “
Other recent reverse mortgage action taken by the FHA, as detailed in the publication of previous MLs and information notices, include the addition of submissions for reverse mortgage valuations to the “Catalyst” software platform. Â»From the agency; the issuance of new waivers for HECM borrowers affected by the pandemic; and an extension of the moratorium on evictions.
Read Letter from the mortgagee 2021-24 at the HUD.