COVID-19: Will a Borrower be required to make a “lump sum” payment to their loan servicer for the total missed payments at the end of the COVID-19 Forbearance period?

No. While a borrower who receives a COVID-19 Forbearance is responsible for repaying the suspended mortgage payments or the balance of reduced mortgage payments, they are not required to make a “lump sum” repayment for the total missing payments immediately at the end of the COVID-19 Forbearance period.
 
Following the completion or expiration of the COVID-19 Forbearance period, the mortgage loan servicer must evaluate the Borrower to see what loss mitigation options may be available to reinstate the Mortgage.  All loss mitigation options are coordinated through the mortgage loan servicer.  Borrowers must contact the mortgage loan servicer to explore their loss mitigation options.
 
OWNER-OCCUPANT BORROWERS
An owner-occupant Borrower who indicates they have the ability to resume making on-time mortgage payments, and were current or less than 30 Days past due as of March 1, 2020, are eligible for review for the COVID-19 Loss Mitigation Home Retention Options in the following order:

  • COVID-19 Standalone Partial Claim
    A Partial Claim is a no interest junior lien secured by the property which is used to pay the balance owed for the suspended mortgage payments. No payments are due on the COVID-19 Standalone Partial Claim until the payoff, maturity or acceleration of the FHA-insured Mortgage, including the sale of the Property, a refinance, or the termination of FHA insurance on the Mortgage.
  • COVID-19 Owner-Occupant Loan Modification
    A COVID-19 Owner-Occupant Loan Modification may be used to modify the rate and term of the Mortgage.
  • COVID-19 Combination Partial Claim and Loan Modification (Non-FHA-HAMP)
    Mortgages that could not be reinstated by a COVID-19 Standalone Partial Claim or COVID-19 Owner-Occupant Loan Modification may be able to be reinstated through the COVID-19 Combination Partial Claim and Loan Modification option.
  • COVID-19 FHA Home Affordable Modification Program (FHA-HAMP) Combination Loan Modification and Partial Claim with Reduced Documentation
    Borrowers may provide income documentation to be reviewed for an affordable monthly payment under a COVID-19 FHA-HAMP Combination Loan Modification and Partial Claim with Reduced Documentation, which may include a principal deferment.
NON-OCCUPANT BORROWERS
Non-Occupant Borrowers are eligible to be reviewed for the COVID-19 Non-Occupant Loan Modification, which modifies the rate and term of the Mortgage.
 
BORROWERS MORE THAN 30 DAYS DELINQUENT AS OF MARCH 1, 2020   
Borrowers who are not eligible for COVID-19 Loss Mitigation Options because they were more than 30 Days past due as of March 1, 2020, must be evaluated by the mortgage loan servicer for the standard FHA Loss Mitigation Options which may include a Loan Modification, Partial Claim or Combination Loan Modification and Partial Claim under the FHA-Home Affordable Modification Program (FHA-HAMP).
 
Mortgagees must offer eligible Borrowers the COVID-19 Loss Mitigation Options and procedures set forth in Mortgagee Letter 2020-22 no later than 90 days from July 8, 2020, but may begin offering the new options immediately.
 
Borrowers may wish to contact a HUD-approved Housing Counseling Agency for unbiased counseling on their particular situation.  HUD-approved Housing Counseling Agencies may be located by calling HUD’s interactive voice system at 1-800-569-4287 or online at:  https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
 
Additional information and resources for borrowers impacted by the COVID-19 National Emergency are available on the Consumer Financial Protection Bureau (CFPB) website at:  https://www.consumerfinance.gov/about-us/blog/guide-coronavirus-mortgage-relief-options/
 
Additional FHA Policy Information is available at: 

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-05486