FHA Issues Guidance for Major Disaster Areas During COVID-19

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.