Homeowners facing financial challenges caused by the pandemic now have until Dec. 31 to request forbearance if they have an FHA loan. A forbearance approval would allow them to avoid monthly payments in increments that could potentially last up to a full year.
The Federal Housing Administration (FHA) announced it’s extending the dateOpens in new tab.Opens as PDF. for single family homeowners with FHA-insured mortgages to request an initial forbearanceOpens in new tab.Opens as PDF. from their mortgage servicer. An approved request would initially allow them to avoid mortgage payments for up to six months with the possibility of extending it up to one year.
The offer applies to homeowners experiencing financial hardship as a result of the COVID-19 pandemic. The window to request assistance from their mortgage servicer was slated to expire at the end of October, but FHA says they can now request help until Dec. 31, 2020.
“I can’t stress enough that this relief should be reserved for those that need it most,” says Ben Carson, secretary of Department of Housing and Urban Development (HUD). “Americans who are capable of paying their mortgage on time should do so. The great American come-back is in full force – if we work together, we can achieve and even surpass the economic prosperity we saw prior to the pandemic.”
FHA requires mortgage servicers to provide up to six months of COVID-19 forbearance if a homeowner requests the assistance, and up to an additional six months if homeowners request an extension. Homeowners can obtain forbearance approval only from their mortgage service company.
“Our goal is to make sure that no homeowner loses their home unnecessarily as a result of this pandemic,” says Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade.
FHA mortgage servicer requirements
Offer homeowners with FHA-insured mortgages mortgage payment forbearance when the homeowner requests it, with the option to extend the forbearance for up to a year in total.
FHA does not require a lump sum payment at the end of forbearance.
Assess homeowners who receive COVID-19 forbearance for a special COVID-19 National Emergency Standalone Partial Claim, which could suspended mortgage payment amounts owed into a junior lien. That junior lien is only repaid when the homeowner sells the home, refinances the mortgage or otherwise extinguishes.
Assess if homeowners not eligible for the COVID-19 National Emergency Standalone Partial Claim would be eligible for one of FHA’s COVID-19 expanded home retention solutions announced on July 8, 2020.
Source: Florida Realtors®
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