FHA Proposed Rule to Modernize Engagement with Borrowers in Default

Recently, the FHA published a proposed rule in the Federal Register that would update HUD regulations that require mortgagees to meet in person with borrowers who are in default on their mortgage payments.  The proposed rule would:

• Allow mortgagees to use electronic and remote communication methods for conducting interviews with borrowers to satisfy FHA early default intervention requirements;
• Eliminate the requirement that mortgagees visit the mortgaged property to schedule a meeting with the borrower; and
• Expand the meeting requirement to include borrowers who do not reside in the mortgaged property or have a mortgaged property that is not within 200 miles of the mortgagee (or mortgagee’s branch office).

If adopted, these changes would provide improved communication options for borrowers who prefer to use electronic or remote communication tools and would make permanent these accommodations that were provided to borrowers during the COVID-19 pandemic.  Comments are open through September 29, 2023.