Relief for HECM Borrowers During COVID-19
As the coronavirus continues to impact our personal and financial well-being, the U.S. Department of Housing and Urban Development (HUD) is providing some immediate relief for homeowners who have been affected by the COVID-19 outbreak.
Foreclosure & Eviction Moratorium
Under the provisions of the new order, a borrower with a single-family loan that is federally backed, insured or guaranteed may request forbearance regardless of delinquency status. This includes Home Equity Conversion Mortgages (HECM). To qualify, borrowers must:
- Submit a request to their loan servicer.
- Prove a financial hardship during COVID-19.
The moratorium is for a 60-day period and applies to the initiation of foreclosures and to the completion of foreclosures in process. Evictions of HECM borrowers is also frozen for 60 days. The deadlines of the first legal action and reasonable diligence timelines are also extended by 60 days.
Keep in mind, borrowers will need to repay the deferred amount.
While the foreclosure and eviction provisions are the most significant part of this legislation, there are some appraisal policy updates that can help keep the application process moving for both the borrower and the lender.
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More on Reverse Mortgages and COVID-19
Exterior-Only Appraisals
To conform the current coronavirus pandemic, house appraisers must exercise caution. For this reason, the FHA has authorized FHA roster appraisers to use exterior-only or desktop-only appraisal inspections as a substitute for interior inspections for HECM for Purchase, HECM Traditional and HECM Refinance transactions. The same policy applies to FHA forward mortgages. This provision helps keep the application process moving. The measure is effective until May 17, 2020.
New HECM Applications Processing
If you think a federally insured reverse mortgage loan (HECM) might be right for you, rest assured, borrower applications are still being processed by the FHA with as little disruption as possible.
Mortgage rules can change quickly as the coronavirus pandemic evolves, so stay in touch with a Certified Reverse Mortgage Professional for all the latest news and updates.
Learn more about how people are using home equity conversion mortgages for purchasing homes:
Please keep in mind that the reverse mortgage industry in constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines.