FHA revises loss mitigation options for hurricane victims
WASHINGTON — The Federal Housing Administration is revising its foreclosure prevention options to assist struggling borrowers in Puerto Rico and the U.S. Virgin Islands affected by last year’s hurricanes.
The new policy lets servicers evaluate borrowers for the Disaster Standalone Partial Claim before the disaster loan modification using their pre-disaster monthly principal and interest payment. It also allows borrowers to keep their current interest rate and term of the FHA-insured mortgage, and expands the eligibility criteria for the Disaster Standalone Partial Claim, which the administration first announced in February.
Previously, the claim was supposed to be used only if all other options had been attempted, but under the new policy, the claim will be the first mortgage relief option available for those affected.
“We have a lot of options available to help FHA-insured families keep their homes but every day we wait, those options become more limited,” FHA Commissioner Brian Montgomery said in a press release. “Meanwhile, we intend to monitor our servicers very closely to make sure eligible families get the mortgage relief they qualify for.”
The Department of Housing and Urban Development has also extended its foreclosure moratorium to Sept. 16 for homeowners in Puerto Rico and the U.S. Virgin Islands. HUD directed FHA-approved mortgage servicers to continue suspending foreclosure actions for the next 30 days. The department does not plan on issuing any further extensions after this one expires.
“This moratorium will provide additional time for mortgagees to evaluate borrowers for the Disaster Standalone Partial Claim and other loss mitigation solutions in the waterfall,” the FHA said.