The Federal Housing Administration (FHA) and U.S. Department of Housing and Urban Development (HUD) today announced it is extending the date for single family homeowners with FHA-insured mortgages to request an initial forbearance from their mortgage servicer to defer their mortgage payments for up to six months.
Homeowners experiencing a financial hardship as a result of the COVID-19 pandemic may now request an initial forbearance through the end of this year, December 31. (Previously, homeowners with FHA-insured mortgages needing assistance had until October 30 to request a COVID-19 forbearance from their mortgage servicer.)
HUD Secretary Benjamin Carson said that no American should fear losing a home in the midst of this pandemic.
“Today’s forbearance request extension for single family homeowners further solidifies that commitment. I can’t stress enough that this relief should be reserved for those that need it most. 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.”
According to a press release, FHA requires mortgage servicers to provide up to six months of COVID-19 forbearance when a homeowner requests this assistance, and up to an additional six months of forbearance for homeowners who request an extension of the initial forbearance. Homeowners needing assistance must engage with their servicer to obtain an initial forbearance or to obtain an extension of the initial forbearance.
"By providing this important extension, FHA seeks to assist those struggling with the continued financial effects of the COVID-19 pandemic," added Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade.
Deputy Assistant Secretary for Single Family Housing Joe Gormley expounded on the importance of keeping up with payments when possible.
"It’s always in a homeowner’s best interest to make their mortgage payments if they are able. But for those who are struggling right now, we urge them to engage with their servicer immediately. And, if your servicer contacts you, it is crucial that you respond to them to let them know if you need assistance. The last thing FHA wants is for any homeowner to risk losing their homeownership investment if they are eligible for assistance.”
The FHA press release further broke down FHA requirements for servicers:
- Offer homeowners with FHA-insured mortgages mortgage payment forbearance [1] 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 the forbearance period.
- Assess homeowners who receive COVID-19 forbearance for its special COVID-19 National Emergency Standalone Partial Claim before the end of the forbearance period. The COVID-19 National Emergency Standalone Partial Claim puts all suspended mortgage payment amounts owed into a junior lien, which is only repaid when the homeowner sells the home, refinances the mortgage, or the mortgage is otherwise extinguished.
- Assess homeowners who are not eligible for the COVID-19 National Emergency Standalone Partial Claim for one of FHA’s COVID-19 expanded home retention solutions announced on July 8, 2020 [2].