April 1, 2020
Are you worried about protecting your home from foreclosure during the coronavirus outbreak?
The FHA and HUD official site now features a section dedicated to consumers who need advice about foreclosure avoidance, what to do if they fall behind on mortgage payments, and other advice for dealing with FHA mortgages, reverse mortgages, and FHA refinance loans during the coronavirus pandemic.
FHA lenders have been asked by the Department of Housing and Urban Development, ”to use reasonable judgment” when trying to decide who is legitimately affected by coronavirus-related job loss and income interruption for the purpose of evaluating the loan.
There is a real danger in this difficult time that FHA borrowers could lose their homes if there are missed payments, loan default, etc.
The potential risks to a home in times of financial uncertainty include falling behind on mortgage payments and the associated credit damage that can do. But the FHA and HUD have issued guidance for borrowers to help avoid loan default and foreclosure.
Your loan officer is required to identify the cause of loan default, and those who are worried about getting in trouble with their FHA loan must contact the lender as soon as possible.
In fact, you should contact your lender BEFORE things get so bad that you are forced to skip a mortgage payment. The earlier you call, the more options you may have. The longer you wait, the less flexible your options get until there is nothing left but to do a deed-in-lieu of foreclosure, short sale, or other drastic actions.
Your lender may have the ability to help you if you don’t wait. What kind of help is available? According to HUD, during a foreclosure moratorium, your loan may not be referred to foreclosure if you were affected by a disaster;
Your lender will evaluate you for any available loss mitigation such as a loan forbearance plan, loan modification, etc. Borrowers who wait too long to get help may only have a pre-foreclosure sales option, or a deed-in-lieu of foreclosure.
That is why it is key to get help early. Miss one payment, you have many more options than if you miss three payments. Miss more than one and your options get more limited until there are none left. Contact your loan servicer as soon as you know you may have financial trouble for best results.
When the coronavirus outbreak began, the FHA and HUD issued a 60-day foreclosure moratorium; this does NOT mean that borrowers are automatically approved to skip payments or take other measures without contacting the lender for approval first. Call your lender today.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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