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FHA Proposes Revisions to Single-Family Servicing Policies

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The Federal Housing Administration (FHA) published proposed revisions to its Single-Family servicing policies that are designed to remove unnecessary barriers for homeowners seeking mortgage relief.

Revisions were posted on its Single-Family Housing Drafting Table.  The Administration will be accepting industry feedback on the proposal for 60 days.

“Our proposed policy changes will strengthen servicers’ ability to keep families experiencing financial challenges in their homes. They reduce the unnecessary barriers that often impede the delivery of timely borrower assistance,” said Acting Federal Housing Commissioner Len Wolfson.

The FHA’s revisions include:

  • Revising the standard servicing loss mitigation home retention waterfall to ensure borrowers are assessed for the solution that is most likely to best help them avoid foreclosure;
  • Eliminating unnecessary and time-consuming borrower documentation requirements for Trial Payment Plans, bringing FHA requirements into alignment with industry best practices and allowing servicers to grant assistance more quickly; and
  • Modifying other servicing and operational policies, including the allowable fee structures, that provide more consistency between FHA policies and those used by the private market and the Government Sponsored Enterprises.

“The proposal we posted today is part of FHA’s work to update its end-to-end servicing policies to promote efficiency while managing risk to FHA’s Mutual Mortgage Insurance Fund,” said FHA Deputy Assistant Secretary for Single Family Housing Joe Gormley. “These revisions, if implemented, will address key challenges our business stakeholders, industry groups, and borrowers have communicated to us over the last several years.”

Earlier this month the FHA and the Federal Housing Finance Agency (FHFA) announced additional measures to assist homeowners.

The FHFA announced that the GSEs—Fannie Mae and Freddie Mac—will extend several loan origination flexibilities until August 31.

These flexibilities were set to expire on July 31, 2020.

Extended flexibilities include:

  • Alternative appraisals on purchase and rate term refinance loans;
  • Alternative methods for documenting income and verifying employment before loan closing; and
  • Expanding the use of power of attorney and remote online notarizations to assist with loan closings.

Additionally, the Federal Housing Administration (FHA) announced several options for homeowners whose COVID-19 forbearance is coming to an end.

FHA clarified that none of its home retention options in the waterfall of solutions require a borrower to submit their missed payments immediately in a lump sum. The administration also clarified that servicers may not charge fees or penalties for any payments missed during a COVID-19-related forbearance.

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
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