Homeowners with federally backed reverse mortgages in in hurricane-ravaged areas received a foreclosure reprieve from the government Monday.
The Federal Housing Administration extended the foreclosure timeline for Home Equity Conversion Mortgages in Puerto Rico and the U.S. Virgin Islands through May 18. The moratorium applies to properties in regions identified as Presidentially Declared Major Disaster Areas (PDMDAs) in the wake of Hurricane Maria, and was initially set to expire Monday.
The news comes amid multiple public calls for an extension, with advocates in New Jersey calling on companies with mortgage holdings in Puerto Rico to hold off on foreclosures until the island can fully recover from the devastating storm, which made landfall on September 20.
However, as Finance of America Reverse president Kristen Sieffert told NJ.com, lenders of FHA-backed products have little choice but to follow the government’s timeline for foreclosures, whether they want to initiate proceedings on vulnerable homeowners or not.
“Given that [FAR] does not have control over foreclosure timelines with respect to insured loans, we believe the best outcome for homeowners in this area would be an extension of HUD’s foreclosure moratorium, and intend to advocate for this extension directly to HUD,” Sieffert said last month.
In addition, at least one lender in Puerto Rico indicated that homeowners with reverse mortgages fared better than their forward counterparts.
‘We haven’t had any issues with a borrower losing their entire home,” David Levis, president of the San Juan-based lender The Money House, Inc., told RMD in February. “It’s because of the fact that most, if not all, of reverse mortgages in Puerto Rico were given to people who have cement, concrete walls.”
The May 18 moratorium applies to foreclosures for loans that became due and payable for reasons other than the death of the last surviving borrower and non-borrowing spouse, according to FHA; the freeze is also valid for new actions and those already in progress.
“We worked with our servicers and outside counsel, and [HUD] responded favorably,” National Reverse Mortgage Lenders Association executive vice president Steve Irwin told RMD.
Read the full announcement in FHA INFO #18-12.
Written by Alex Spanko