The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) announced today extended and updated guidelines surrounding forbearance requests for mortgage borrowers who have been impacted by the economic effects of the COVID-19 coronavirus pandemic, including the delay of due and payable requests for Home Equity Conversion Mortgages (HECMs). This is according to the publication of Mortgagee Letter (ML) 2021-04.
“Effective immediately, this ML extends through March 31, 2021, the deadline for single family borrowers with FHA-insured mortgages to request an initial COVID-19 forbearance from their mortgage servicer to defer or reduce their mortgage payments for up to six months,” FHA explained in an informational notice. “If needed, this forbearance can be extended for an additional six months. This ML also extends the deadline to request the initial extension period for HECM borrowers impacted by the COVID-19 pandemic.”
Original guidance and updated date
The original delay for calling a HECM due and payable was handed down last April by the Trump administration, in ML 2020-06.
“Pursuant to the COVID-19 National Emergency, upon request of the Borrower, the Mortgagee must delay submitting a request to call a loan due and payable,” reads the HECM provision in ML 2020-06. “The initial extension period may be up to 6 months. If needed, an additional period of up to 6 months may be approved by HUD. The term of either the initial or the extended extension period may be shortened at the Borrower’s request. The Mortgagee must waive all Late Charges, fees, and penalties, if any, as long as the Borrower is in an extension period.”
ML 2021-04 published on Tuesday updates the effective date of the HECM delay as originally published to March 31, 2021.
“In support of President Joseph R. Biden’s plans to combat COVID-19 and provide economic relief for all Americans, HUD is working to provide mortgagees and borrowers with loss mitigation options to mitigate the financial impacts of the COVID-19 pandemic,” the new ML reads in part. “Due to the continued COVID-19 pandemic and the continued impacts on borrowers across the country, HUD recognizes a further need to extend this deadline.”
While servicers are likely to have to deal with some issues regarding the implementation of another extension, the National Reverse Mortgage Lenders Association (NRMLA) generally welcomes the relief that this new action will bring to those affected by COVID-19 according to association President Steve Irwin.
“NRMLA greatly appreciates the extension of timelines as provided in today’s Mortgagee Letter, 2021-04,” Irwin told RMD. “There are some implementation issues the HECM servicing industry will have to grapple with, but the relief is welcome news as the pandemic continues to take its toll on the country.”
The fact that this additional action is being taken demonstrates that HUD recognizes the continual need to help borrowers affected by the ongoing pandemic, which should provide some much-needed relief for those affected. This is according to Leslie Flynne, SVP of loan servicing at Reverse Mortgage Solutions (RMS).
“When the COVID-19 forbearance was first issued in April of 2020 we all had hopes that the pandemic would be well controlled long before now,” Flynne tells RMD in an email. “The fact it has now been extended to March 31, 2021 demonstrates that our borrowers are not out of danger from this virus and HUD is responding appropriately.”
For RMS’ part, it stands ready and willing to work with all affected borrowers as the nation continues to navigate its way out of the uncertainty created by the pandemic, she explains.
“We do not know if this will be the last extension since vaccinations have not become available to the majority of Americans,” Flynne says. “However, we will continue to work with our borrowers to provide extensions that will keep them safe.”
‘Providing more time’
The need for continued action in the wake of the pandemic has not diminished since the original relief was first handed down, according to Acting HUD Secretary Matthew Ammon.
“On the first day of his new administration, President Biden took immediate actions to stem the economic devastation experienced by the nation’s hardworking families because of the pandemic,” said Acting Secretary Ammon in a statement. “Today’s extension supports the president’s direction by providing more time for homeowners to seek mortgage payment relief.”
This latest action further aligns with last week’s extension of a moratorium on foreclosures and evictions according to HUD, which marked the first HECM-relevant action taken by the new administration.
Read Mortgagee Letter 2021-04 at HUD.