Early Saturday morning, the U.S. Department of Housing and Urban Development (HUD) issued a partial waiver of 24 CFR 203.604, a servicing policy requiring mortgagees to establish in-person contact with borrowers during early default intervention. This suspension was issued in response to public concerns over the spread of COVID-19.
In the partial waiver, which was signed late Friday evening, The Hon. Brian D. Montgomery, Assistant Secretary for Housing - Federal Housing Commissioner states that the policy "is not practical given the public health recommendations being disseminated by local, state, and
federal government agencies to limit contact between individuals, in order to contain
the spread of the COVID-19 virus."
In place of the face-to-face requirement, the partial waiver outlines that mortgagees must establish contact via alternate methods, such as phone interviews, email, or video conferencing technology such as skype. This partial waiver is limited to a 12-month period and does not apply to face-to-face requirements in place for the Section 248 insurance program.
Montgomery goes on to write that without this measure there would be a risk of "non-compliance by mortgagees as well as borrowers. . . . [that] could hinder the servicing of FHA-insured loans."
HUD also affirmed uninterrupted operations for its partners, stating, "the Federal Housing Administration (FHA) wants to assure its mortgagees and other interested stakeholders of its continued business operations in this evolving environment. Should FHA Single Family be required to close some or all its offices, our business operations will continue as usual; however, with some possible delays."
To address additional concerns stemming from COVID-19, the office released a "COVID-19 Questions and Answers" document. In it, FHA outlines loss-mitigation options available to borrowers who may be negatively impacted by the coronavirus, stating:
As with any other event that negatively impacts a borrower’s ability to pay their monthly mortgage payment, FHA’s suite of loss mitigation options provides solutions that mortgagees should offer to distressed borrowers–including those that could be impacted by the Coronavirus–to help prevent them from going into foreclosure. An example of one of these options is our Special Forbearance for unemployed borrowers. The SFB-Unemployment Option is a Home Retention Option available when one or more of the Borrowers has become unemployed and this loss of employment has negatively affected the Borrower’s ability to continue to make their monthly Mortgage Payment.
In a statement earlier this week, Federal Housing Finance Agency (FHFA) Director Mark Calabria also addressed how the FHFA, as well as Fannie Mae and Freddie Mac, are focusing their response by providing guidance to servicers.
“To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment,” Calabria said.
In addition, industry groups are coming together to support homeowners who may impact impacted by COVID-19. On Friday, DS News reported that under the direction of the National Mortgage Servicing Association (NMSA), leaders from across the mortgage industry are joining forces to create the COVID-19 Mortgage Industry Task Force (ITF) to coordinate on processes, procedures, and policies related to the crisis.
More than 25 mortgage banks and nonbank servicers, legal professionals, and service providers will take part in the coalition.
"The speed of response from the industry has been unparalleled," said Ed Delgado, President and CEO of Five Star Global. "We will continue to work with industry groups such as the Mortgage Bankers Association to focus on practical solutions for both the near-term and long-term impacts of COVID-19, in order to assist homeowners and to ensure the stability of the American housing market.”