The coalition emphasized the need for an extension of the FHA’s current loss mitigation waterfall to February 2026 to facilitate thorough discussion and implementation of proposed servicing handbook updates. They noted that many of the policies outlined in the draft are familiar, necessitating adequate time for implementation to ensure effectiveness and avoid disruption to mortgage servicing.
The letter, signed by a coalition of six organizations, highlighted the importance of maintaining a streamlined loss-mitigation process, avoiding a return to a cumbersome documentation-heavy system, and urged for a unified approach to address various hardships faced by borrowers. This simplification, they argued, would benefit mortgage servicers during the implementation phase.
The FHA's proposed options aim to assist borrowers struggling with mortgage payments through methods such as standalone partial claims and a 40-year loan modification. The coalition expressed that these strategies could significantly aid homeowners, particularly those unable to resume payments, thereby enhancing overall loan recovery rates and maintaining home retention.
Highlighting support for FHA's new payment reduction strategy, the coalition noted that it aligned with practices used by Fannie Mae and Freddie Mac. This approach aims to provide borrowers with more manageable financial obligations and facilitate their long-term ability to retain their homes while making sustainable monthly payments.
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