COVID-19: What are the requirements for using a COVID-19 Combined Partial Claim and Loan Modification (Non-FHA-HAMP)?

The Mortgagee must review Owner-Occupant Borrowers for a COVID-19 Combination Partial Claim and Loan Modification (Non-FHA-HAMP) where:

  • The modified monthly Mortgage payment will increase utilizing the COVID-19 Owner-Occupant Loan Modification, and
  • The Borrowers are unable to bring the Mortgage current through the COVID-19 Standalone Partial Claim because:
    • the total arrearage exceeds the available portion of the statutory maximum for Partial Claims, and the available portion of the statutory maximum for the Mortgage has not been fully exhausted, or
    • the Borrower cannot resume their existing monthly Mortgage Payments with a COVID-19 Standalone Partial Claim.
 
Eligibility for the COVID-19 Combination Partial Claim and Loan Modification (Non-FHA HAMP)
The Mortgagee must ensure that:
  • The Mortgage was current or less than 30 Days past due as of March 1, 2020;
  • The Borrower has not exceeded the 30 percent statutory maximum value of all Partial Claims for an FHA-insured Mortgage, as listed in Statutory Maximum for Partial Claims (III.A.2.k.v(D)(2)(a));
  • The Borrower indicates they have the ability to make the modified Mortgage Payment; and
  • The Property is owner-occupied.
 
Terms of the COVID-19 Combination Partial Claim and Loan Modification (Non-FHA-HAMP)
For the COVID-19 Combination Partial Claim and Loan Modification, the Mortgagee must ensure the following:
  • The Mortgagee waives all accumulated late charges, fees, and penalties;
  • The Mortgagee must only capitalize into the modified Mortgage of the COVID-19 Combination Partial Claim and Loan Modification:
    • Arrearages for unpaid accrued interest, and
    • Mortgagee advances for escrowed items.
  • The Mortgagee must determine the maximum Partial Claim amount available that does not exceed the 30 percent maximum statutory value of all Partial Claims for an FHA-insured Mortgage, as listed in Statutory Maximum for Partial Claims (III.A.2.k.v(D)(2)(a)). The Mortgagee must apply any remaining available Partial Claim amount toward the arrearage first, and then capitalize the remaining arrearage into the modified Mortgage.
  • The Mortgagee must ensure that the COVID-19 Combination Partial Claim and Loan Modification fully reinstates the Mortgage.
  • The Mortgagee must ensure that the modified Mortgage, including Adjustable Rate Mortgage (ARM), Graduated Payment Mortgage (GPM) or Growing Equity Mortgage (GEM), is modified to a fixed rate Mortgage.
  • The Mortgagee must ensure that the interest rate is no greater than the Market Rate as defined by HUD.
  • The Mortgagee must ensure that the term for the modified Mortgage is 360 months.
    • The term may be less than 360 months if requested by the Borrower.
  • The Borrower’s monthly Mortgage Payment may increase.
  • HUD does not provide a model for COVID-19 Loan Modification documents, but the Mortgagee must ensure the FHA-insured modified Mortgage remains in first lien position and is legally enforceable.
  • The Mortgagee must ensure that the Borrower(s) receives only one permanent COVID-19 Home Retention Option.
  • A Trial Payment Plan (TPP) is not required.
 
Required Documentation for COVID-19 Combination Partial Claim and Loan Modification (Non-FHA-HAMP)
The Mortgagee must submit all required documentation for COVID-19 Partial Claims as listed under Delivery of Partial Claim Documents (III.A.2.k.v(J)(6)).
 
The Mortgagee is automatically granted a 90-Day extension to the six-month deadline for the recorded Mortgage.
 
If a Mortgagee experiences additional delays out of their control, including past the automatic 90-Day extension for the recorded Mortgage, that impact delivery of the Partial Claim documents, Mortgagees may file requests for an additional extension in accordance with Requests for Extensions of Time for Delivery of Partial Claim Documents (III.A.2.k.v(J)(7)).

For additional information see:

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-05568