FHA issued Mortgagee Letter 2019-14, updating loss mitigation procedures for borrowers whose home or place of employment is located in a presidentially-declared major disaster area (PDMDA). As outlined in the Mortgage Letter, FHA added new loss mitigation options and modified several existing loss mitigation options that were put in place in 2018 as temporary provisions for specific PDMDAs.
In addition, FHA now makes permanent:
- the Disaster Standalone Partial Claim option (to help eligible borrowers on a forbearance plan resume their pre-disaster mortgage payments and avoid payment shock);
- streamlined income documentation and revised loss mitigation procedures for the Disaster Loan Modification option and Disaster Standalone Partial Claim option; and
- the Trial Payment Plan (as an alternative to providing income documentation for these disaster loss mitigation options).
The modified loss mitigation options affect the following topics in Handbook 4000.1:
- Loan Modification without a Financial Evaluation (section III.A.3.c.iv(C));
- Eligibility for Loan Modification without Financial Evaluation (section III.A.3.c.iv.(C)(1)).
- Terms of the Loan Modification (section III.A.3.c.iv(C)(2));
- Disaster Standalone Partial Claim (section III.A.3.c.iv.(D));
- Home Disposition Options (section III.A.3.c.iv.(E));
- Suspension of Reporting to Consumer Reporting Agencies (section III.A.3.c.iv(F)); and
- Waiver of Late Charges (section III.A.3.c.iv(G)).
Servicers must implement the new loss mitigation procedures no later than November 30, 2019 (servicers may, however, begin using the new procedures immediately).
