The United States Department of Housing and Urban Development (HUD) released a mortgage letter (ML) on Tuesday containing a number of housing stipulations for all of the Federal Housing Administration’s (FHA) single-family homes, including the Home Equity Conversion Mortgage (HECM) program. These include an additional extension of the foreclosure and deportation moratoriums first announced early last year, and an extension of the required deadlines to 180 days from the end of the moratorium.
The measures are being taken to ensure that as many people as possible affected by the economic damage from the COVID-19 coronavirus pandemic can be kept in their homes in an effort to mitigate the additional health and financial risks that have arisen from limit the extensive crisis, according to a statement Tuesday morning by the White House.
“These critical protections were due to expire in March, putting many at risk of further debt and home loss,” the White House statement read in part. “Now homeowners will receive the urgently needed help as we face this unprecedented national emergency. Today’s move builds on the steps the president took on day one to expand foreclosure moratoriums for federally guaranteed mortgages. “
Expansion of execution and deportation moratoriums
According to the publication of ML 2021-05, the moratoria on foreclosure sales and deportations has been extended by 90 days until June 30, 2021.
“As President Biden has made clear, there is an urgent need for us to help homeowners across the country who are struggling financially with this unprecedented national emergency,” Acting HUD Secretary Matthew Ammon said in a statement announcing the extension. “The steps we are taking today will provide immediate relief to those in desperate need of assistance as well as help more homeowners to keep their homes and resume their payments when the pandemic abates.”
First of all, the moratorium set nearly a year ago by President Donald Trump’s administration and most recently extensive Until the end of March on the first day of President Joe Biden’s administration, it prohibits servicers from initiating or continuing foreclosure and foreclosure-related evictions for HUD-insured or guaranteed single-family mortgages. The one exception is for packages guaranteed by legally vacant and abandoned properties.
This latest guideline marks the fifth time the HUD’s moratorium on executions and deportations has been extended, based on the publication of four previous MLs issued in 2020 and 2021, marking some sort of collaboration between the Trump and Biden administrations .
Extension of the deadline
The new letter also expands options for reverse forbearance mortgage borrowers, offering up to two additional three-month COVID-19 forbearance periods or HECM extension periods for select borrowers. The HECM renewals apply to loans that are due and payable,
HUD also requires mortgage lenders to provide a grace period of up to six months when a borrower who is in financial difficulty due to the lingering effects of the pandemic requests such assistance. An additional six-month waiting period for a borrower applying for an extension is also available.
“For Borrowers who applied for their initial renewal period on or before June 30, 2020, the Borrower may request and the Mortgagee must approve up to two additional three-month renewal periods,” reads the new guideline for HECM loans not yet due. and payable. ”“ The borrower must apply for each three-month extension separately. Neither of the two additional three-month extension periods may be extended after December 31, 2021. No extension period may be extended beyond June 30, 2022. ”
In addition, mortgage holders are required to notify the HUD of any additional renewal periods by submitting an extension request through the Home Equity Reverse Mortgage Information Technology (HERMIT) system, the ML reads.
For HECM loans that have achieved due and payable status, new guidelines specify that the borrower can request or that the mortgagee can take two additional three-month extension periods.
“If a Borrower requests extension periods of three months, the Mortgagee must approve them,” reads the ML. “The Borrower must apply for each three-month extension separately. Neither of the two additional three-month extension periods may be extended beyond December 31, 2021. No extension period may be extended beyond June 30, 2022. “
The White House statement also specifically mentions the importance of addressing the needs of a broad pool of borrowers, including those with a reverse mortgage.
“Communities large and small need this help. That is why the Department of Housing and Urban Development, Department of Veterans Affairs and Department of Agriculture teamed up to provide assistance across the board to urban, suburban, rural and military homeowners, including seniors with reverse mortgages, ”the statement read partially.
ML 2021-05, published Tuesday, updates the effective date of the HECM delay as originally published to June 30, 2021. The original delay for charging a due and payable HECM was handed over by the Trump administration last April, in ML 2020-06.
Industry, HUD response
The additional rebate for reverse mortgage borrowers as a result of this guideline is welcomed by the reverse mortgage industry trade association, the National Reverse Mortgage Lenders Association (NRMLA).
“NRMLA and its members are grateful for the extension of the moratorium until June 30 and welcome the extension of the required deadlines to 180 days from the end of the moratorium,” NRMLA Chairman Steve Irwin said in an email to RMD. “These actions will enable our servicer members to more fully engage with those HECM borrowers who may need more time to resolve lingering issues.”
A spokesperson for HUD also tells RMD that the actions detailed in the ML today are being taken specifically because the ministry recognizes the need that certain seniors with reverse mortgage loans have resulting from the COVID-19 pandemic.
“Many homeowners with FHA-insured mortgages continue to struggle financially because of COVID-19, and they are in dire need of help,” the HUD spokesperson told RMD. “This also applies to seniors with FHA-insured Home Equity Conversion Mortgages. To assist seniors with HECMs, FHA today extended the timeframe for the start of an initial COVID-19 HECM extension to June 30, 2021. For HECMs that began an initial renewal period on or before June 30, 2020, up to two additional three month renewal periods are available. “
Read Mortgagee Letter 2021-05 at HUD.
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