The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) announced the extension of relief initiatives which apply to the reverse mortgage program in a slew of Mortgagee Letters (MLs) issued on December 17, and which were formally announced on Monday. The agencies also announced new extensions of Home Equity Conversion Mortgage (HECM) program waivers into 2021.
The Department issued a total of five MLs at the end of last week, four of which can be applied to the HECM program. Among the provisions which apply to the industry, HUD is extending a previously-established moratorium on foreclosures and evictions an additional 60 days, and is also extending the time in which HECM borrowers affected by COVID-19 can request a forbearance action. The agencies are also extending the ability for HECM borrowers to re-verify their employment status, and extending the allowable time that appraisers can exercise the exterior-only relief option.
The additional reverse mortgage program waivers, which were initially handed down at the beginning of November, join the extensions that push deadlines of HECM program relief to the end of February, 2021.
Extension of foreclosure and eviction moratoriums, HECM forbearance period
In ML 2020-43, the foreclosure and eviction moratoriums originally announced by President Donald Trump at the initial onset of the pandemic in March have been extended to February 28, 2021. This marks the fourth such extension for the moratoriums, as the country has now had to contend with spiking infection rates of the COVID-19 coronavirus.
“Due to the continued national emergency resulting from the COVID-19 pandemic, HUD is issuing a further extension for all FHA-insured mortgages except those secured by vacant or abandoned properties,” the ML reads in part about the reasoning behind this latest extension.
Additionally, the publication of ML 2020-44 extends for reverse mortgage borrowers the ability to request a forbearance, which delays the ability for a lender to call a loan due and payable. The original guidance was handed down in ML 2020-06, and this latest notice extends that relief provision further into 2021 due to the “continued impacts on borrowers across the country” stemming from the ongoing pandemic, HUD explains in the ML.
“Through this ML, HUD is also extending the deadlines associated with the due and payable dates for a HECM for HECM borrowers impacted by the COVID-19 pandemic,” the ML reads in part.
The deadline for extending the ability of borrowers to make a forbearance request also now falls on February 28, 2021.
Extension of verification for employment, exterior-only appraisals
In ML 2020-46, HUD is extending the re-verification of employment requirements for cases closed on or before February 28, 2021. Similarly, the previously-announced extension of exterior-only appraisals has also been extended to the same date, a measure designed to mitigate the spread of COVID-19 among appraisers and the seniors served by the reverse mortgage product category.
“Due to the continuing national emergency caused by the COVID-19 pandemic, HUD is issuing this ML to extend the re-verification of employment guidance issued in ML 2020-05 and extend the Exterior-Only Appraisal inspection option announced in ML 2020-37,” the ML reads in part.
Previously, HUD had also allowed desktop-only appraisals for reverse mortgages in an effort to completely eliminate interactions with borrowers, but HUD rescinded the desktop-only option in October. The Department specified that the removal of the desktop-only appraisal option is largely due to material data which indicated that it is not required to continue in pursuit of its original purpose, which was to mitigate the spread of COVID-19 as much as possible.
Extension of temporary reverse mortgage waivers
Two reverse mortgage program waivers first handed down by HUD and FHA in early November have also now been extended into February, which allow mortgagees to be more flexible in submitting HECM assignment claims without borrower signatures, as well as reviewing borrowers for subsequent repayment plans for unpaid property charges, regardless of the total outstanding money owed that has not yet been paid (arrearage).
“As all HECM borrowers are age 62 and above, and this population is particularly susceptible to COVID-19, this waiver mitigates public health risks by allowing for continued HECM borrower annual certification without requiring a signed occupancy certification,” the first waiver extension reads. Similar language appears in the second waiver, which takes the step of specifying that “conditions warranting this partial waiver still impact HECM borrowers.”
The initial waiver was requested by Matt Martin, director of HUD’s National Servicing Center (NSC), and is prudent since many of the difficulties being faced by vulnerable populations, including seniors, directly affects the abilities of many HECM borrowers to send and receive important pieces of documentation, the initial justification said.
The second extended waiver will provide relief for seniors who fail to meet the “two consecutive payments” standard of the original guidance, extending an earlier waiver designed to answer this need that was set to expire on December 31, the new justification says.
Relief extended into new administration
The actions being taken by FHA and HUD constitute a concerted effort on the part of Trump administration housing officials to extend needed relief to mortgage borrowers all across the country, who continue to contend with the hardships wrought by the pandemic. This is according to HUD Secretary Dr. Ben Carson.
“Throughout this global pandemic, the Trump administration has taken unprecedented steps to assist FHA-insured borrowers who are impacted by COVID-19,” said Carson in a statement. “Today’s foreclosure moratorium and forbearance extensions for single family homeowners ensure American homeowners continue to have the critical relief and support they need to get back to financial stability.”
The necessity for relief has not diminished, and HUD recognizes the need for continued assistance as the country continues to navigate the uncertainty created by COVID-19 according to FHA Commissioner Dana Wade.
“COVID-19 has created hardships for millions of Americans. FHA will continue to assist borrowers who are struggling to regain their financial footing as a result of this pandemic. American homeowners should not be forced from their homes while they are seeking help,” said Commissioner Wade in the announcement of the new relief.
The new relief handed down in this instance pushes the deadlines of all associated measures into the purview of the incoming Joe Biden administration. President-elect Biden recently named Ohio Congresswoman Marcia L. Fudge as his nominee to succeed Secretary Carson in the leadership position at HUD, and if confirmed by the Senate will likely have to weigh the options of either continuing, or adding to these mortgage relief programs.
RMD reached out to Rep. Fudge through the Biden transition team for comment on these new relief extensions, but did not hear back as of press time.
Read the Mortgagee Letters and the applicable waivers guidance in FHA INFO #20-95.