The Federal Housing Administration last week offered another extension on the foreclosure moratorium instituted in the wake of last summer’s hurricanes.
Affected borrowers in Puerto Rico and the U.S. Virgin Islands now have until September 15 to work out any potential foreclosure issues surrounding their FHA-backed reverse mortgage loans before the process begins again.
Foreclosures in Puerto Rico created controversy as residents began to rebuild after Hurricane Maria, with servicers noting that they’d have no choice but to initiate or complete foreclosure actions without the FHA’s intervention.
“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,” Finance of America Reverse president Kristen Sieffert told a local paper earlier this year.
The FHA extended the foreclosure moratorium multiple times over the course of this past year, with the most recent move published in FHA INFO notice #18-35.
But David Levis, president and CEO of Puerto Rico-based reverse mortgage lender The Money House, said that the impact of the storms on Home Equity Conversion Mortgage borrowers was minimal.
“We haven’t had any issues with a borrower losing their entire home,” Levis told RMD. “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 HECM-related extension came on the same day that the FHA offered a similar new timeline on its forward loans in Mortgagee Letter 2018-05, with the added caveat that there are no more extensions on the horizon.
“We need borrowers to contact their servicers right away and begin the process of finding a permanent solution to their mortgage situation,” FHA commissioner Brian Montgomery said in a statement. “We have a lot of options available to help FHA-insured families keep their homes but every day we wait, those options become more limited. Meanwhile, we intend to monitor our servicers very closely to make sure eligible families get the mortgage relief they qualify for.”.
Written by Alex Spanko