InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
FHA extends foreclosure and eviction moratorium for two more months
On June 17, FHA announced that it will extend its foreclosure and eviction moratorium through August 31, 2020, which applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages, excluding legally vacant or abandoned properties (previously discussed here and here). The announcement also reminds servicers of their obligations under the CARES Act.
HUD will allow mortgages to be endorsed despite forbearance
On June 4, HUD announced new, temporary guidance (see FHA Info #20-36 and HUD Mortgagee Letter 2020-16), which, among other things, grants mortgagees the ability to submit a mortgage for insurance endorsement involving a borrower who is experiencing financial hardships due to the Covid-19 pandemic, provided the mortgagee “executes a two-year partial indemnification agreement.” The temporary guidance sets the initial amount of partial indemnification at 20 percent of the original loan amount, which will only become payable if the mortgage goes into foreclosure and results in a claim to the FHA Mutual Mortgage Insurance Fund. Mortgagees may access the new agreement and instructions for endorsing these loans here. The guidance also provides for a temporary certification amendment to HUD 92900-A, which allows mortgagees to submit a separate addendum to a mortgagee’s certification addressing a mortgagee’s knowledge of changes in a borrower’s employment status and ability to make payments as a result of Covid-19 after the closing of a mortgage. HUD will also “continue to monitor the impacts to the market as well as implications to the Mutual Mortgage Insurance Fund and may adjust the level of partial indemnification for future indemnification contracts accordingly.”
HUD issues mortgagee letter extending interim procedures relating to FHA Section 232 approved mortgages
On May 28, the U.S. Department of Housing and Urban Development issued Mortgagee Letter 2020-15 to all FHA Section 232 Approved Mortgagees regarding the extension of interim procedures issued in Mortgagee Letter 20-10 to address site access issues during the Covid-19 pandemic. The guidance provides temporary modifications pertaining to third-party site inspections for Section 232 FHA-insured healthcare facilities with effective dates within 60 days of the issuance of the mortgagee letter. The letter also provides guidance on other aspects relating to Section 232 properties, including regarding Property Capital Needs Assessments, appraisals, Section 232 Phase 1 Environmental Site Assessments, asbestos surveys, and radon testing, among other things.
FHA issues mortgagee letter extending guidance on employment reverification and appraisals
On May 14, the FHA issued Mortgage Letter 2020-14, which extends the effective period of the guidance in Mortgagee Letter 2020-05 allowing for flexibility relating to employment reverification and appraisal protocols for FHA single family programs affected by Covid-19 until June 30.
FHA issues mortgagee letter on extension of foreclosure and eviction moratoriums
On May 14, FHA issued Mortgagee Letter 2020-13, which extends the foreclosure and eviction moratorium in connection with the Covid-19 emergency and issues new reporting requirements related to FHA single family’s CARES Act loss mitigation options. The foreclosure moratorium is extended to June 30, 2020, and applies to FHA-insured single family mortgages, except vacant or abandoned properties. The moratorium on evictions of persons from properties securing FHA-insured single family mortgages, excluding actions to evict occupants of legally vacant or abandoned properties, is also extended for the same period. The bulletin also provides guidance on how mortgagees must report the Default/Delinquency Reason Codes that apply to the borrower at the end of each reporting cycle. The mortgagee must update the code as the borrower’s circumstances change.
Agencies jointly release fact sheets for services and consumers regarding CARES Act forbearance
The Federal Housing Administration, the Department of Veterans Affairs, and the Rural Housing Service have jointly issued fact sheets for servicers and for consumers outlining certain requirements and obligations under CARES Act mortgage payment forbearance. The fact sheet for servicers provides guidance for assisting and educating borrowers and explains that loss mitigation options will vary based on the program under which the loan is insured or guaranteed. The fact sheet for consumers provides guidance on requesting forbearance and information on the forbearance program.
HUD OIG issues Covid-19 guidance to homeowners
On April 28, the Department of Housing and Urban Development’s Office of Inspector General issued a bulletin outlining Federal Housing Administration guidance to servicers and borrowers regarding implementing the forbearance requirements of the CARES Act. The office issued the bulletin based on a review of information that the top 30 FHA mortgage servicers provide on their websites, which the office found to be incomplete, outdated, inconsistent, or unclear.
HUD issues mortgagee letter regarding Section 223(f) underwriting mitigants for multifamily housing projects
On April 10, HUD released Mortgagee Letter 2020-11 to Multifamily Regional Directors, Production Directors, Operations Officers, and FHA MAP Lenders regarding Section 223(f) underwriting mitigants for multifamily housing projects due to the economic impact of Covid-19. Specifically, HUD takes the position that the Covid-19 emergency constitutes a “material change” that requires underwriting mitigants to reduce this additional risk. As such, the letter provides instructions to HUD staff about mitigants that may be included in the Firm Commitment for Section 223(f) loans that are in process, as well as for projects where a Firm Commitment has been issued. Among other things, HUD imposes certain debt service reserve requirements for both market rate transactions and affordable transactions. HUD also requires that, at endorsement, cash out proceeds in excess of 250% of the non-critical repair escrow be used to fund the debt service reserve account. The letter is effective immediately and lasts until HUD determines that additional mitigants for Section 223(f) transactions are no longer required.
HUD issues mortgagee letter on implementation of CARES Act forbearance
On April 10, HUD issued Mortgagee Letter 2020-09 to FHA Approved Multifamily Mortgagees regarding implementation of CARES Act forbearance. The letter includes guidelines on CARES Act forbearance for FHA insured mortgages, 542(b) and (c) risk share mortgages, and HUD-held loans. Among other things, the guidance notes that HUD will not participate in the negotiation of forbearance repayment between multifamily borrowers and lenders. However, if the forbearance agreement contains actions requiring HUD approval, a copy of the forbearance agreement must be provided to HUD.
The letter also provides guidance on continuing program obligations and the post-forbearance period. Mortgagees are reminded that during the forbearance period, all other material terms and conditions of the HUD Loan Documents and the FHA Regulatory Agreement remain in effect. The letter notes that Lenders should use Multifamily Delinquency and Default Reporting System to record post-forbearance delinquencies and defaults. Finally, the letter notes that HUD has reviewed the MBA’s sample forbearance agreement drafted in April 2020, and stated that forbearance agreements that follow this format would not be submitted to HUD prior to execution and implementation by the lender and borrower. HUD is also developing its own form for lenders and borrowers to use.
HUD announces system to securely deliver case binders electronically for endorsement
On April 6, HUD issued Mortgagee Letter-2020-07 announcing that the FHA is accelerating the deployment of “FHA Catalyst”—a system to securely deliver case binders electronically for endorsement—which is now available. This initiative is in response to issues mortgagees have faced in complying with FHA requirements for the delivery of Single Family Forward and HECM paper case binders as well as issues the FHA has faced in processing such paper case binders in light of the Covid-19 outbreak. The letter provides an overview of FHA Catalyst and instructions on access and use of the platform.