The Federal Housing Administration [1] (FHA) Tuesday announced extensions of a set of policy flexibilities for single-family lenders and servicers, part of its effort to maintain new mortgage originations for homebuyers and allow 203(k)-funded [2] rehabilitation projects to continue, even throughout the COVID-19 pandemic.
FHA's Limited 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their homes. Homebuyers and homeowners can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or an FHA appraiser. "Homeowners can make property repairs, improvements, or prepare their home for sale," according to FHA. "Homebuyers can make their new home move-in ready by remodeling the kitchen, painting the interior, or purchasing new carpet."
According to a press release from FHA, "these temporary policies recognize the sustained need for flexibility during this critical time to ensure mortgage financing remains available for the nation’s low- and moderate-income homebuyers and that home rehabilitation work can continue."
As of Tuesday, the temporary policies will be in place through June 30, 2021.
HUD Office of Housing and Federal Housing Administration Principal Deputy Assistant Secretary Lopa Kolluri says the extensions allow lenders to continue originating and closing mortgages designated for FHA insurance endorsement during the pandemic and assist the completion of critical in-progress home repairs.
The Mortgagee Letter 2021.06 [3] and new Mortgagee Letter 2021.07 [4] outline details and background of the policies related to Single Family Title II [5] and Home Equity Conversion Mortgages (HECM).
Under the extension, the following allowances exist, according to the news release: "Use of an exterior-only appraisal scope of work; and re-verification of employment, verification of self-employment income, and verification of rental income."
FHA added that for Single Family Title II forward 203(k) rehabilitation mortgages only,it also is extending temporary policies for the administration of 203(k) Rehabilitation Mortgage Insurance Program escrow accounts for borrowers in forbearance.
Any questions regarding the mortgagee letters may be directed to the FHA Resource Center at 1.800.CALL.FHA. For additional information on the topic, visit hud.gov/answers [6].