The FHA Covid-19 Forbearances allow for reduced or suspended payments without specific terms of repayment, for six months at a time, up to 18 months. Deadline for applications was May 11, 2023. The end of the health emergency is now over. If you’ve lost your income, job change or divorce for instance, you may have qualified for this relief.
A FHA Covid-19 Modification is called Advance Loan Modification. If a mortgage loan is in forbearance, the review will occur within 30 days of forbearance ending. For those mortgage loans are not in forbearance, if the loan is 90 plus days delinquent it must be reviewed for a modification offer on or before 10/30/2024. This is still in effect!
January 2023 new guidelines: a substantial change is that the guidance now applies for non-occupied borrowers. Some other notes:
- Default is not necessary. Just imminent default. There is a presumption of imminent default if the borrower has received HAF funds and attests they can’t resume monthly mortgage.
- The reason for default is irrelevant.
- FHA HAMP is suspended until October 30, 2024, borrowers must be considered for all COVID retention options first.
- Pre-Foreclosure Sales and Deed-In-Lieus are suspended until October 30, 2024 borrowers must be considered for all COVID retention options first.
- The Mortgagee may offer the Borrower an Informal or Formal Forbearance prior to reviewing the Borrower for a COVID-19 Recovery Home Retention Option.
- There is language pertaining to unemployed borrower and those in Emergency Disaster areas (Florida hurricane/flood areas count). Applies to non-occupied houses as well
What will a Covid-19 Advance Loan Mortgage (ALM) provide:
- Owner-occupant and non-occupant borrowers
- 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
- Does not require borrower contact. Servicers will proactively mail the modified mortgage documents to borrowers who can achieve the required payment reduction. If the borrower chooses to accept the Covid-19 ALM they will only need to sign and return the mortgage modification documents sent to them by their mortgage servicer.
A Chapter 13 bankruptcy also provides a good opportunity for a modification of your mortgage. The reorganization plan provided by a bankruptcy fits well with the mortgage modification portal to ensure this is done correctly and timely.
If you need help keeping your home, or would like to go over your options objectively to help you get on the right path forward, please reach out to us below.