The American Bankers Association and several industry and consumer groups are asking the Federal Housing Administration to extend the expiration date for pandemic-related protections for borrowers while it considers their revisions to a proposed replacement for the program.
The FHA in 2021 unveiled a set of loss mitigation options — evaluated through a series of steps known as a “waterfall” — to help borrowers struggling to make mortgage payments on their FHA-insured mortgages because of the COVID-19 pandemic. Those options currently are set to expire on April 30, but the agency has proposed establishing a permanent loss mitigation waterfall as a replacement. In two letters, ABA and five groups representing mortgage providers, servicers and consumers asked FHA to extend the COVID-19 waterfall to Feb. 1, 2026.
Among other things, the groups said they supported a streamlined loss mitigation process for loss mitigation reviews, the use of a single waterfall of permanent loss mitigation options for all hardships, and FHA’s decision to incorporate targeted payment reductions in the permanent waterfall. However, they also had several recommendations for improving the proposed permanent waterfall, including eliminating requirements for hardship documentation and reducing duplicative seasoning rules for modification access.
