The U.S. Department of Housing and Urban Development last week announced a set of permanent options for mortgage servicers to help borrowers with Federal Housing Administration-insured single-family mortgages keep their homes. FHA is part of HUD.
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 were set to expire on April 30. The American Bankers Association and other groups requested an extension of the deadline. They also offered several recommendations for improving the proposed permanent waterfall, including eliminating requirements for hardship documentation and reducing duplicative seasoning rules for modification access.
The updated permanent loss mitigation options will be available through mortgage servicers for borrowers who fall behind on their mortgage payments regardless of the reason for their hardship, according to HUD. The agency also extended the deadline for the temporary pandemic-related options until Feb. 1, 2026. In addition, and as requested by ABA and other associations, it separated the proposed Equity Saver Sale provisions, which would permit borrowers to list and sell homes that have retained equity while the mortgage servicer pauses foreclosure, to provide an additional 60 days for feedback on the proposed provision.
