Borrowers who have a high LTV (loan-to-value ratio) got some good news recently as the Federal Housing Finance Agency announced its intention to extend the Home Affordable Refinance Program (HARP) into 2017. In addition, the Agency introduced a new refinance program designed to take the place of HARP when it expires.
The programs are for borrowers whose loans have been sold to Fannie Mae and Freddie Mac. However, borrowers whose loans are insured by the Federal Housing Administration (FHA) are about to get some relief, too. The FHA just announced it will make life a little easier for borrowers who are struggling to keep their homes.
According to the FHA, its new procedures will “strengthen the process mortgage servicer uses to help struggling families avoid foreclosure and remain in their homes.” In addition, the FHA says it will streamline the loss mitigation procedures used by mortgage lending servicers known in the industry as “home retention options.” Those options are alternatives to foreclosure available to enable borrowers to keep their homes. The FHA says these new changes will apply to loan servicers as they evaluate borrowers for the popular FHA-Home Affordable Modification Program.
Servicers must implement the changes by December 1, 2016 – designed to shorten the length of time and “red tape” the servicer and the borrower must go through to correct a delinquency and begin a loss mitigation home retention program. The FHA also said it will eliminate “certain obstacles” to give loan servicing companies more flexibility to evaluate an unemployed borrower’s financial situation.
Here are a few specific changes the FHA announced:
• Servicers will be required to convert 3-month trial modifications that are successful into permanent modifications within 60 days (formerly it took an average of 4-6 months)
• Borrowers with three missed mortgage payments will be allowed to qualify for a partial claim to bring their payments in arrears current (previously there was a 4-month minimum)
• Do away with the normal stand-alone modification option so borrowers are able to access the FHA-HAMP option and take advantage of its better payment relief sooner
• Eliminate the 12-month minimum delinquency period before qualifying for the FHA’s special forbearance option, now allowing servicer to extend the program to unemployed households sooner in their delinquency status
For more information on the FHA’s new policy changes, go to