The FHA is set to rescind relaxed COVID-era mortgage practices by October 1, conducting a broader review of loss mitigation policies. This aims to assess the impact on the Mutual Mortgage Insurance Fund (MMIF) and ensure borrowers are suitably assisted. The revised guidelines limit eligibility for permanent home retention options to every 24 months, a decision made to enhance risk management and borrower outcomes post-pandemic. The review will scrutinize tools originally designed to prevent foreclosures, evaluating their ongoing necessity and effectiveness.
The relaxed COVID-era waterfall will remain in place through Sept. 30 for all Title II single-family forward mortgage programs, with a raft of full rescissions to loss mitigation practices coming Oct. 1.
FHA's prior failure to definitively sunset the COVID-19 emergency loss mitigation waterfall has increased risk in the MMIF, hurt taxpayers, and set many FHA borrowers up for failure.
FHA is limiting borrower eligibility for permanent home retention loss mitigation options to once every 24 months to improve borrower outcomes and address elevated risks.
These changes are part of a wider review of FHA loss mitigation practices that aims to assess the impact on the Mutual Mortgage Insurance Fund.
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