FHA Single Family Housing COVID-19 Q&A
Updated 5/11/20: HUD has enhanced its COVID-19 FAQ resource to include expanded guidance for a variety of categories related to lending/servicing.
FHA Resource Center Bulletin Board
Updated 4/14/20: HUD updated its COVID-19 frequently asked questions (FAQ) resource for single family housing stakeholders.
Latest additions:
Page 3-4 (Origination and Processing):
Q. Mortgagees have been unable to obtain tax transcripts during the COVID-19 Emergency, does FHA require tax transcripts directly from the Internal Revenue Service (IRS)?
A. No. The mortgagee must obtain the borrower’s signature on the appropriate IRS form to obtain tax returns directly from the IRS for all credit-qualifying mortgages at the time the final Uniform Residential Loan Application (URLA) is executed. If FHA requires tax returns as required documentation for any type of effective income, in lieu of signed individual or business tax returns from the borrower, the mortgagee may obtain a signed IRS Form 4506, Request for Copy of Tax Return, IRS Form 4506-T, Request for Transcript of Tax Return, or IRS Form 8821, Tax Information Authorization, and tax transcripts directly from the IRS.
Page 6 (Closing and Insuring):
Q. On Title insurance: There are several large counties where recording offices are shut during the COVID-19 Emergency. Will FHA accept title policies with gap insurance?
A. FHA does not mandate title insurance. However, the mortgagee must ensure that all objections to title have been cleared and any discrepancies have been resolved, to ensure that the FHA-insured mortgage is in first lien position. FHA does not object to mortgagees obtaining gap insurance to protect against the potential of not obtaining first lien position.
Q. Does FHA accept loans closed using a remote online notary during the COVID-19 Emergency? If so, which states are allowed under your policy?
A. FHA does not regulate the use or format of the notarization of documents. The mortgagee must ensure that the mortgage and Note comply with all applicable state and local requirements for creating a recordable and enforceable mortgage, and an enforceable Note, including the requirements for notarization of these documents. Generally, the state law governs what requirements are applicable for proper notarization of a document.
Q. Does FHA permit the use of a Power of Attorney (POA) to execute closing documents during the COVID-19 Emergency?
A. FHA permits a borrower to designate an attorney-in-fact to use a POA to sign documents on their behalf at closing, including page 4 of the final Form HUD-92900-A, HUD/VA Addendum to Uniform Residential Loan Application (URLA), and the final Fannie Mae Form 1003/Freddie Mac Form 65, URLA. Detailed requirements on the use of a POA to execute closing documents can be found in the SF Handbook, Section II.A.6.a(xiii). Included in this section are specific requirements for use of a POA, which has a connection to the transaction.
Page 7 (Servicing and Loss Mitigation):
Q. Does the borrower have to email or call their mortgagee to request a COVID-19 Forbearance? What other methods of communication are acceptable?
A. A borrower may request a COVID-19 Forbearance from their mortgagee via any available method of communication. Acceptable methods of communication regarding a forbearance include, but are not limited to, emails, texts, fax, teleconferencing, websites, web-portals, etc. If a mortgagee sends out a general communication advising that forbearance can be granted, the borrower may reply to that communication requesting a forbearance, via e-mail, phone call, or other methods of communication clearly made available to the borrower by the lender.
Page 8 (Servicing and Loss Mitigation):
Q. What are the options for borrowers, impacted by the COVID-19 pandemic, who were more than 30 days delinquent on March 1, 2020?
A. All FHA borrowers impacted by the COVID-19 pandemic, whether directly or indirectly, qualify for the COVID-19 Forbearance. The COVID-19 Standalone Partial Claim is available to owner-occupant borrowers whose mortgages were current or less than 30 days delinquent as of March 1, 2020, the declared date of the COVID-19 pandemic. Borrowers who were more than 30 days past due as of March 1, 2020, and who are in need of loss mitigation assistance, must be reviewed for FHA’s standard loss mitigation options (forbearance, loan modification, and FHA-HAMP).
Page 9 (Servicing and Loss Mitigation):
Q. Can a borrower obtain more than one COVID-19 Standalone Partial Claim?
A. Only one COVID-19 Standalone Partial Claim is available to each borrower. If the borrower requires additional assistance, mortgagees must evaluate the borrower for HUD’s Loss Mitigation Options.
Q. For the purpose of servicing, when are exceptions to the appraisal inspection protocols for the use of exterior-only and desktop-only scope of work, due to the COVID-19 National Emergency, permitted?
A. Appraisals completed in connection with the servicing of FHA’s forward or HECM portfolios may accept either an exterior-only or desktop appraisal.
Page 11 (HECM):
Q: Are HECM property charge repayment plans, as described in ML 2015-11, considered unsuccessful if the borrower’s payment is more than 60 days delinquent during the Presidentially-Declared COVID-19 National Emergency?
A. Yes. A property charge repayment plan is unsuccessful if a borrower does not make a full monthly payment within 60 days of the due date. HUD has issued a temporary waiver to remove the $5,000 total arrearage limit from ML 2015-11 to allow mortgagees to offer new repayment plans to borrowers regardless of the total remaining amount of their outstanding property charge arrearage.
Q. Are all HECM foreclosure and claim deadlines included in the COVID-19 HECM extensions announced in ML 2020-06, such as notifying HUD that a HECM is due and payable, sending notification to the borrowers or their heirs that a loan is due and payable, obtaining a due and payable appraisal, and the six-month marketing period?
A. Yes, all foreclosure and claim deadlines may be extended for a period not to exceed six months, with an additional extension period, not to exceed six months, available with HUD approval for all HECMs that have become automatically due and payable, entered into a deferral period or became due and payable with HUD approval.
Page 12 (HECM):
Q. What evidence does the mortgagee need to retain to support the borrower’s request to delay submission of a Due and Payable request in accordance with ML 2020-06 for the COVID-19 National Emergency?
A. There are no documentation requirements for this extension, but FHA encourages mortgagees to maintain complete servicing notes including information regarding the borrowers’ request.
Q. Should a mortgagee still perform monthly occupancy inspections during the COVID-19 National Emergency, as described in 24 CFR 206.140, when a borrower has requested, or the mortgagee has opted to utilize a six-month extension?
A. Yes, the requirements of 24 CFR §206.140 remain in effect. If a HECM is in a due and payable status and the property is vacant or abandoned, the mortgagee must conduct the monthly visual inspections of the property as required by 24 CFR §206.140 including during an extension period. These inspections are exterior-only and no physical contact with the borrower and/or occupants is required since the property is either vacant or abandoned.
Q. Must servicers give HECM borrowers a forbearance, upon the request of a borrower, during the COVID-19 National Emergency if the loan has already been called due and payable with HUD approval?
A. Yes. HECM servicers must follow the provisions of the CARES Act requiring a forbearance upon request of the borrower for all federally insured mortgages. FHA has provided servicers with an extension to all foreclosure and claim deadlines for loans that have become due and payable with HUD approval during the COVID-19 National Emergency. This extension would cover any required CARES Act forbearance time period and provides servicers with additional time to take certain actions to meet FHA guidelines.
Investor Update
April 8, 2020
Source: HUD
Important Information Regarding Continuation of Business Operations Related to COVID-19
As it relates to COVID-19 (Coronavirus), the Federal Housing Administration (FHA) wants to assure its mortgagees and other interested stakeholders of its continued business operations in this evolving environment, should some or all its offices be required to close. This Question and Answer (Q&A) document has been prepared to address and provide answers to stakeholder questions regarding the continuity of FHA’s business operations and any possible impacts. This Q&A will be revised as needed. Stakeholders are advised to regularly access this document for updates.
Latest Additions (4/3/20):
Q38: Will interest on my HECM be waived during the COVID-19 Presidentially Declared National Emergency?
A38: Interest will continue to accrue on all HECM loans. However, any borrower in an extension period relating to the COVID-19 Presidentially- Declared National Emergency will not be charged any late fees or penalties during this time.
