HUD Extends Loan Mod Option to 480 Months
March 9, 2023
Source: The M Report
The U.S. Department of Housing & Urban Development (HUD) has published a Final Rule in the Federal Register its intent to increase the maximum allowable term for Federal Housing Administration (FHA)-insured loan modifications from 360 months to 480 months (40 years). The new rule will become effective Monday, May 8, 2023.
On April 1, 2022, the FHA published a Proposed Rule in the Federal Register to solicit public comments on a proposal to allow mortgage servicers to provide a standalone 40-year loan mod option for struggling homeowners.
Increasing the maximum term limit to 480 months will allow mortgagees to further reduce the borrower’s monthly payment as the outstanding balance would be spread over a longer time frame, providing more borrowers with FHA-insured mortgages the ability to retain their homes after default. This change will also align FHA with modifications available to borrowers with mortgages backed by Fannie Mae and Freddie Mac. This final rule adopts HUD’s April 1, 2022, proposed rule without change.
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