FHA Issues Waiver for Automatic Extensions on Foreclosure Initiation Timelines Tied to Loss Mitigation

FHA has issued a waiver under its Single Family Housing Policy Handbook 4000.1, section III.A.2.p.i(D)(2), modifying the conditions for automatic 90-day extensions of the foreclosure initiation time frame when a loss mitigation option is involved.

The waiver removes the third condition, which required the mortgagee to have already “initiated foreclosure action after reviewing the Borrower for other Loss Mitigation Options from the date the Borrower defaulted under a Loss Mitigation Option or a TPP Agreement failed.”

Previously, mortgagees had to satisfy all three conditions under section III.A.2.p.i(D)(2) to qualify for the automatic extension.  With the waiver, mortgagees can now obtain the 90-day extension without having already initiated foreclosure after a loss mitigation or Trial Payment Plan failure.

HUD stated that the change is intended to give mortgagees greater flexibility to complete loss mitigation and avoid unintended foreclosure outcomes.  The waiver took effect June 30, 2026.