FHA Issues Guidance for Major Disaster Areas During COVID-19

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FHA recently issued a reminder to mortgagees related to originating and/or servicing FHA-insured mortgages in a Presidentially-declared Major Disaster Area (PDMDA) during the COVID-19 pandemic.

If an affected borrower was already on a COVID-19 Loss Mitigation Option or a COVID-19 Recovery Option prior to the date of the President’s Major Disaster Area declaration, the mortgagee should continue to follow the COVID-19 loss mitigation guidance found in Handbook 4000.1 Section III.A.2.o and Mortgagee Letters 2021-15, 2021-18, and 2021-19.  Mortgagees should evaluate all other borrowers for any loss mitigation options available to them, including but not limited to the following in PDMDAs:

  • FHA-insured forward mortgages secured by properties in a PDMDA are subject to a 90-day foreclosure moratorium following the disaster declaration;
  • For any buildings in a PDMDA that are substantially damaged, mortgagees must follow the guidance in Handbook 4000.1 Section III.A.2.n.iii, Monitoring of Repairs to Substantially Damaged Homes; and
  • FHA-insured Home Equity Conversion Mortgages (HECM) secured by properties located in a PDMDA, that are due and payable for reasons other than the death of the last surviving borrower or the end of a Deferral Period due to the death of an eligible non-borrowing spouse, are subject to a 90-day extension of HECM foreclosure timelines.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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