The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) are extending previous relief provisions which involved instructing servicers of Home Equity Conversion Mortgages (HECMs) to delay due and payable requests on reverse mortgage loans for borrowers that request such relief, since an American at risk of losing his or her home would enhance the already-pronounced economic shock of the COVID-19 coronavirus pandemic.
A new Mortgagee Letter (ML) signed by FHA Commissioner Dana Wade and released on Tuesday extends the date from October 30 to December 31, 2020, during which time a borrower may request an initial 6-month COVID-19 forbearance or make the initial request for an extension to a HECM due and payable period.
Extending HECM relief
In the newly-published ML 2020-34, previously-outlined provisions of relief for reverse mortgage borrowers affected by the COVID-19 pandemic have been extended to the end of 2020, as the economic impact of the pandemic continues to impact the financial standing of American mortgage borrowers and senior reverse mortgage borrowers.
“Due to the continued COVID-19 pandemic and its impact on borrowers across the country, HUD recognizes the need to extend the deadline for approving a COVID-19 Forbearance or a HECM Extension beyond the October 30, 2020, date provided in ML 2020-06,” the latest document reads. “Through this ML, HUD is allowing Mortgagees to approve Borrowers, impacted directly or indirectly by the COVID-19 pandemic, for an initial COVID-19 Forbearance or HECM Extension no later than December 31, 2020.”
For reverse mortgages, this means extending deadlines for a HECM related to due and payable requests, and loss mitigation guidance for HECM loans in default due to unpaid property charges.
In terms of a forbearance request, the maximum allowable time frame remains at 12 months, according to HUD. In light of the current crisis, keeping Americans in their homes for longer has taken on increased importance due to the ways in which local, state and federal health authorities recommend ways for Americans to combat the spread of the coronavirus.
“The last thing any of us wants is for Americans to lose their homes unnecessarily while we continue to fight this invisible enemy,” said HUD Secretary Dr. Ben Carson in a press release announcing the original initiatives in April. “If you’re struggling, immediate help is now available. The FHA will continue to work with stakeholders to ensure that the loss mitigation options that are offered for both forward and reverse borrowers are appropriately tailored for the present situation.”
In the original action, HUD detailed that for any borrowers who are still able to make their mortgage payments, they should continue to do so. Those who are experiencing a financial hardship should contact their servicer immediately.
Recent pandemic action
The federal government – and HUD and FHA in particular – have taken numerous actions in an effort to provide additional relief to mortgage borrowers and seniors who have availed themselves of a reverse mortgage. Recently, FHA announced an extension of its relaxed appraisal requirements for most FHA-insured loans originated during the COVID-19 coronavirus national emergency. The extension, announced in Mortgagee Letter 2020-28 is effective for all appraisals submitted through October 31 and accounted for the third such extension.
HUD also extended its previously-enacted moratorium on foreclosures and evictions through the end of 2020, which continues to apply to homeowners with FHA-insured Title II Single Family forward mortgages and HECMs. The moratorium continues to direct mortgage servicers to halt all new foreclosure actions and suspend actions now in process; and to cease all evictions from FHA-insured single family properties.
Additionally, FHA recently issued temporary waivers for non-borrowing spouses (NBS) of HECM borrowers, superseding the instructions of two previously released MLs due to ongoing concerns related to the pandemic.
Read Mortgagee Letter 2020-34 at HUD.