Federal Housing Administration (FHA) Monday announced updates to its Single Family Handbook, which it says will strengthen loss-mitigation approaches for struggling borrowers while streamlining servicer requirements.
"The update [1] to FHA's Servicing and Loss Mitigation section of the FHA Single Family Housing Policy Handbook streamlines many standard operational requirements for mortgage servicers, including revising FHA’s loss mitigation home retention waterfall so that servicers can more quickly offer effective loss mitigation home retention options to borrowers in danger of losing their homes to foreclosure," FHA stated in a press release.
Additional changes streamline and enhance many servicing requirements to provide more consistency with industry practices and reduce barriers to servicing FHA-insured single family mortgages, according to FHA.
"With these updates, we have strengthened the ability of servicers to reach and help more struggling borrowers with FHA-insured mortgages, more quickly,” said Principal Deputy Assistant Secretary for Housing Lopa Kolluri. “The updates to our policies will ensure quality servicing activities, streamline servicing requirements, more closely align our servicing policies with industry servicing practices, and improve outcomes.”
FHA says the described policy changes—based on rigorous internal analysis and extensive public feedback—will improve the effectiveness and efficiency of FHA’s servicing policies. Changes announced today also augment FHA’s actions earlier this year [2] to provide urgent and immediate support to the nation’s homeowners struggling to make their mortgage payments due to COVID-19.
- A revised loss mitigation waterfall that allows servicers to review struggling borrowers for a permanent FHA Home Affordable Modification Program (FHA-HAMP) home retention option without a lengthy forbearance, which has been proven to be highly effective at helping borrowers avoid redefault and foreclosure;
- Streamlined documentation requirements to avoid unnecessary delays and to align more closely with standard industry servicing practices, including removing signature requirements on Trial Payment Plans; and
- A revised structure for certain allowable costs and fees that corresponds with fee structures used by other industry participants.
“The work completed today responds to feedback we’ve received about the complexity and cost of servicing FHA-insured mortgages,” said Acting Associate Deputy Assistant Secretary for Single Family Housing Julie Shaffer. “FHA requirements will continue to reflect our high expectations of servicers and updating our processes and addressing outdated and unnecessary requirements will improve the program for borrowers and servicers.”
FHA-insured borrowers should visit FHA’s COVID-19 Resources for Homeowners [3] web page on FHA.gov. Other borrowers are encouraged to visit the Consumer Financial Protection Bureau’s Coronavirus Mortgage and Housing Assistance [4] web pages.