The Federal Housing Administration is working on additional loss mitigation methods to help more homeowners avoid eviction and foreclosure during the pandemic with their “waterfall method.”
The method moves struggling homeowners through a “filter” of options to try to help them get into a mortgage payment that they can sustain.
Before the end of their mortgage forbearance, homeowners are now assessed for the following options:
- COVID-19 National Emergency Standalone Partial Claim – takes past due amounts and creates a junior lien that can be repaid once the mortgage is paid off.
- COVID-19 Owner-Occupant Loan Modification – modifies the rate and term of the existing mortgage.
- COVID-19 Combination Partial Claim and Loan Modification – partial claim up to 30% of the unpaid principal balance and any other amounts owed are handled through a mortgage modification.
- COVID-19 FHA HAMP Combination Loan Modification and Partial Claim – for borrowers who do not meet any of the previous solutions, it reduces the amount of documentation needed to obtain a COVID-19 FHA HAMP Combination Loan Modification and Partial Claim.
“Subsequently, the HUD released an eviction prevention and stability toolkit to encourage Public Housing Authorities and House Choice Voucher landlords to prepare and implement strategies that will mitigate economic hardships due to COVID-19 while keeping families in their homes.”