Proposed overhaul focuses on expediting homeowner assistance and achieving operational efficiencies that reduce the cost of servicing
WASHINGTON – RealEstateRama – The Federal Housing Administration (FHA) today published proposed revisions to its Single Family servicing policies that are designed to remove unnecessary barriers for homeowners seeking mortgage payment relief, achieve operational consistency with industry standard best practices, and reduce burdens incurred by the industry when servicing an FHA-insured mortgage portfolio. FHA posted the proposal today on its Single Family Housing Drafting Table. FHA will be accepting industry feedback on the proposed changes for 60 days.
“Our proposed policy changes will strengthen servicers’ ability to keep families experiencing financial challenges in their homes. They reduce the unnecessary barriers that often impede the delivery of timely borrower assistance,” said Acting Federal Housing Commissioner Len Wolfson.
Consistent with HUD’s Housing Finance Reform plan, the draft Single Family Housing Policy Handbook 4000.1 chapter revisions focus on:
- Revising the standard servicing loss mitigation home retention waterfall to ensure borrowers are assessed for the solution that is most likely to best help them avoid foreclosure;
- Eliminating unnecessary and time-consuming borrower documentation requirements for Trial Payment Plans, bringing FHA requirements into alignment with industry best practices and allowing servicers to grant assistance more quickly; and
- Modifying other servicing and operational policies, including the allowable fee structures, that provide more consistency between FHA policies and those used by the private market and the Government Sponsored Enterprises.
“The proposal we posted today is part of FHA’s work to update its end-to-end servicing policies to promote efficiency while managing risk to FHA’s Mutual Mortgage Insurance Fund,” said FHA Deputy Assistant Secretary for Single Family Housing Joe Gormley. “These revisions, if implemented, will address key challenges our business stakeholders, industry groups, and borrowers have communicated to us over the last several years.”
The draft changes posted online today are for FHA’s standard Single Family servicing policies, are not effective policy, and do not impact FHA’s special COVID-19 home retention options. Interested stakeholders must submit feedback using the instructions and submission method posted on FHA’s Single Family Housing Drafting Table.
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