Mortgage

FHA taking state AG concerns about servicers ‘very seriously’

FHA taking state AG concerns about servicers ‘very seriously’
Written by Publishing Team

The Department of Housing and Urban Development issued a statement indicating that it takes allegations “extremely seriously” by a group of attorneys general from 20 states that some mortgage companies have failed to offer the recently added FHA amendment option as required.

The statement addresses e-mail It was sent to the agency late last month as the attorney general alleges that “a number of mortgage lenders hired by FHA approved lenders are failing to adequately implement COVID-19 relief.”

Specifically, the AGs say that some unnamed mortgage providers did not comply with the guidelines on the FHA’s COVID-19 Recovery Adjustment, which aims to provide borrowers with 25% paid savings with a long-term reduction in their income after forbearance.

Even after the requested implementation date of October 21, FHA-secured mortgage service providers routinely send letters to borrowers that fail to include the COVID-19 Recovery Amendment as an available option that require paperwork and impose qualifications that are not necessary under FHA guidelines and instruct borrowers during customer service phone calls that this option does not exist,” the AGs claimed.

In response, HUD said it is “committed to helping homeowners struggling due to the pandemic to keep their homes if at all possible, and expects FHA-secured mortgage providers to take all necessary steps to work with borrowers, based on their individual situations, To determine the best FHA loss-mitigating home-holding option available to them.”

Industry experts said retainers generally do their best to prepare for the scrutiny of the loss mitigation process by HUD.

“Every FHA provider knows that their actions will be carefully reviewed by HUD when submitting a claim, so everyone has the same interest in offering consumers the best option they can, given the requirements in force at the time,” said Jeffrey, Partner at Nemon, Partner at The law firm Buckley LLP, which represents financial services firms.

“HUD has changed its requirements a little bit,” he noted in an interview. “In some cases, HUD has acknowledged that it has been virtually impossible to keep up. The service industry is working hard and in good faith to comply with an ever-changing set of requirements.”

States will likely become more focused on non-performing loan drills in part as they are in the midst of starting to distribute money from the federal government Homeowner Assistance Fund.

While the overall rate of delinquency in the United States is declining overall, and has reached the point where it is roughly in line with pre-pandemic levels, it is still relatively high in some individual states, CoreLogic’s Loan Performance Insights latest report shows. .

The top five are Louisiana, which has the highest rate at 8%, followed by Mississippi (6.5%), New York (5.7%), Oklahoma and Alabama. (Both of the latter states have a lag rate of about 5%, with Alabama being slightly lower.)

In an interview, Frank Nothaft, chief economist at CoreLogic, said local hurricanes, the energy sector affected by reduced demand for oil and fuel, or prolonged shutdowns that have affected the regional economy have exacerbated pandemic pressures in such states, resulting in to higher prices.

He added that states are also broadly interested in loan exercises because the level of long-term distress that could lead to the need for adjustments remains high.

“Delinquency cases are fewer, but not equally less,” Nothaft said. “[The serious delinquency rate is] descending but approaching a percentage point higher than it was before the pandemic. There are half a million loans that are more than six months past due, compared to what was the case in the pre-pandemic period.”

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