The Federal Housing Administration today added a 40-year mortgage modification option to assist borrowers who are behind on their mortgage payments for FHA Title II forward mortgages.
The new option is designed to help borrowers who cannot achieve a minimum targeted 25% reduction in the principal and interest portion of their mortgage payment through FHA’s existing 30-year mortgage modification with a partial claim. The 40-year modification with partial claim is now included as a component of FHA’s COVID-19 Recovery Modification and is to be used for borrowers where other FHA recovery options are unable to achieve the minimum targeted reduction.
Earlier this month, FHA published a proposed rule in the Federal Register to solicit public comments on a standalone 40-year loan modification option. This would align FHA with modifications available to borrowers with mortgages backed by Fannie Mae and Freddie Mac, which both currently provide a 40-year loan modification option. The public comment period closes on May 31.