The Federal Housing Administration revised its loss mitigation program to provide a greater number of distressed borrowers the option to qualify for a larger level of assistance.
The changes will reduce the number of full claims against the federal agency’s Mutual Mortgage Insurance Fund and will also assist families in keeping their homes.
"FHA’s Loss Mitigation Program has long been an industry leader in helping to ensure that distressed borrowers are afforded maximum opportunities to retain their homes," said Acting Commissioner Carol Galante of the FHA.
She added, "Not only are we taking steps to make sure more borrowers can benefit from FHA loss mitigation assistance, but we are also targeting our assistance to provide more sustainable payments for borrowers so that they are successful in retaining their homes over the long term. At the same time, these efforts will reduce losses to FHA from foreclosures, benefiting our insurance fund."
Many changes are featured throughout the revision.
The biggest change is streamlining the loss mitigation home retention priority order to a three-tier structure, consisting of special forbearance, loan modification and FHA-Home Affordable Modification Program.
The expansion of the FHA Home Affordable Modification Program will allow more borrowers to find sustainable long-term assistance through mortgage modifications. Also, by redefining "special forbearance" it will only apply in the case of unemployed mortgagors.
Click here for the full list of changes.