WBK Industry News - Federal Regulatory Developments

FHA Clarifies Timing of Review of Borrowers for COVID-19 Loss Mitigation Options

FHA recently announced a clarification concerning the timing of a mortgagee’s review of borrowers in a pandemic-related forbearance for a COVID-19 loss mitigation option.  Specifically, the announcement addresses when it is appropriate for a mortgagee to begin reviewing borrowers for COVID-19 loss mitigation options.

Per FHA requirements, mortgagees must review borrowers for the COVID-19 loss mitigation options upon the completion or expiration of the borrower’s forbearance period.  FHA clarified, however, that mortgagees may begin this review at any time prior to the end of the borrower’s forbearance period and do not need to first wait for the borrower to exit the forbearance period.  Moreover, the announcement emphasized that FHA encourages mortgagees to begin this review process as soon as practicable in the interest of assisting borrowers in resolving delinquencies and avoiding foreclosures.