COVID-19: What loss mitigation options are available to FHA borrowers who are unable to make their mortgage payments due to COVID-19?

FHA has a variety of Loss Mitigation options to assist Borrowers who are unable to make their mortgage payments due to the COVID-19 National Emergency. All of FHA’s loss mitigation options are coordinated through the mortgage loan servicer (servicer).  If you are experiencing a financial hardship due to COVID-19 which is impacting your ability to make on-time Mortgage Payments, contact your servicer as soon as possible and discuss your situation with a loss mitigation specialist. Your servicer’s ability to respond quickly may be impacted as a result of the COVID-19 pandemic.
 
COVID-19 Forbearance
Upon request from the Borrower, the servicer must offer a COVID-19 Forbearance regardless of the delinquency status of the mortgage. The Borrower is not required to provide any documents to support the need for the COVID-19 Forbearance.
The initial COVID-19 Forward Forbearance must be requested by the Borrower and approved by the Mortgagee on or before September 30, 2021.

Initial Forbearance Date

Initial Forbearance Period

Additional Forbearance Period

Forbearance Extensions

Maximum Forbearance Period

March 1, 2020 – June 30, 2020

Up to 6 months

Up to 6 months

Up to 6 months (in 3-month increments)

Up to 18 months

July 1, 2020 – Sept. 30, 2020

Up to 6 months

Up to 6 months

Up to 3 months

Up to 15 months

Oct. 1, 2020 – June 30, 2021

Up to 6 months

Up to 6 months

0

Up to 12 months

July 1, 2021 – Sept. 30, 2021

Up to 6 months

0

0

Up to 6 months


For Borrowers who requested their initial COVID-19 Forbearance:

  • On or before June 30, 2020, if needed, the Borrower may request, and the Mortgagee must approve, up to two additional three-month COVID-19 Forbearance periods, after 12 months of COVID-19 Forbearance. The maximum COVID-19 Forbearance must not exceed 18 months and must not extend beyond December 31, 2021;

  • Between July 1, 2020 and September 30, 2020, if needed the Borrower may request, and the Mortgagee must approve, up to one additional 3-month COVID-19 Foreclosure period, after the 12 months of COVID-19 Forbearance.  The maximum COVID-19 Forbearance must not exceed 15 months and may not extend beyond December 31, 2021;

  • Between October 1, 2020 and June 30, 2021, the maximum COVID-19 Forbearance must not exceed 12 months and may not extend beyond June 30, 2022.

  • Between July 1, 2021 and September 30, 2021, the maximum COVID-19 Forbearance is six months. This COVID-19 Forbearance period must not extend beyond March 31, 2022.

The term of the initial and any additional COVID-19 Forbearance period may be shortened at the Borrower's request.  

During the COVID-19 Forbearance Period, the servicer must waive all Late Charges, fee and penalties, if any.

The Servicer must evaluate the borrower for the COVID-19 Home Retention Options in the following order:


OWNER-OCCUPANT BORROWERS

  • COVID-19 Advance Loan Modification (must be reviewed no later than August 24, 2021)   A COVID-19 ALM is a permanent change in one or more terms of a Borrower’s Mortgage that achieves a minimum 25 percent reduction to the Borrower’s monthly Principal & Interest (P&I) payment that does not require Borrower contact.

  • COVID-19 Standalone Partial Claim   A Partial Claim is a no interest subordinate 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 cannot 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

  • COVID-19 Advance Loan Modification   A COVID-19 ALM is a permanent change in one or more terms of a Borrower’s Mortgage that achieves a minimum 25 percent reduction to the Borrower’s monthly Principal & Interest (P&I) payment that does not require Borrower contact.

  • COVID-19 Non-Occupant Loan Modification   A COVID-19 Non-Occupant Loan Modification may be used to modify the rate and term of the Mortgage.


COVID-19 LOSS MITIGATION HOME DISPOSITION OPTIONS
Owner-Occupant and Non-Occupant Borrowers that do not qualify for a COVID-19 Home Retention Option or indicate they are unable to resume making the monthly or modified monthly mortgage payment must be reviewed for the COVID-19 Home Disposition Options:

  • COVID-19 Pre-Foreclosure Sale (PFS)   If the Borrower does not qualify for any of the COVID-19 Home Retention Options and the property's sales value is not enough to pay the loan in full, the mortgage loan servicer (servicer) may be able to accept less than full amount owed by approving eligible Borrowers for a Pre-Foreclosure Sale, also known as a short sale.

  • COVID-19 Deed-in-Lieu (DIL) of Foreclosure   If the Borrower is unable to complete a COVID-19 PFS transaction at the expiration of the PFS marketing period, they may be able to voluntarily offer to deed (“give back”) the property to HUD in exchange for a release from all obligations under the Mortgage.

All requests for additional information or clarification related to loss mitigation should be directed to your servicer.

Borrowers are encouraged to contact a HUD-approved Housing Counseling Agency for unbiased counseling related to their 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 COVID-19 are available on the Consumer Financial Protection Bureau (CFPB) website at: https://www.consumerfinance.gov/about-us/blog/guide-coronavirus-mortgage-relief-options/  

Benefits.gov is an online resource to help you find federal benefits for which you may be eligible.  Visit https://www.benefits.gov/ for more information and a link to the Benefit Finder, to find information on government benefits you may be eligible to receive.
 
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-05572