The Federal Housing Administration is changing the processes used by mortgage loan servicers to help financially troubled homeowners avoid foreclosures. The revised procedures will reduce the number of steps that servicers and homeowners must take and give servicers more flexibility when they evaluate unemployed homeowners for a forbearance agreement, the FHA says. Servicers must implement the changes by Dec. 1, 2016 (Mortgagee Letter 2016-14).
The FHA highlighted four changes:
- A trial modification that is successful over three months is to be converted into a permanent modification within 60 days. At present, the average is four to six months.
- Homeowners who have missed three payments will be able to apply for a partial claim that brings their mortgages current. Currently, at least four missed payments are required.
- The existing stand-alone loan modification option will be ended. This will give homeowners access to the Home Affordable Modification Program sooner. FHA-HAMP offers more payment relief, the FHA says.
- The 12-month term for the unemployed homeowner forbearance option will be eliminated. This will allow more homeowners to qualify for assistance, the FHA says.
Other revisions include changes to homeowners’ income and financial information verification requirements and tighter restrictions on fees paid by mortgage servicers to third-party service providers who carry out property sales.
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