Industry Update
August 2, 2024

Source: ABA Banking Journal

The Federal Housing Administration released a final rule to make permanent a pandemic-related rule that waives the Department of Housing and Urban Development’s requirement for mortgagees to meet in person with borrowers who are in default on their mortgage payments.

Starting in 2020, HUD waived the face-to-face meeting requirement for mortgagees because of the COVID-19 pandemic. The final rule makes the change permanent by allowing servicers to use remote communication methods for conducting interviews with borrowers to satisfy FHA’s early default intervention requirements.

The rule eliminates the requirement that mortgagees make at least one trip to the mortgaged property to schedule a meeting with the borrower. It also expands the meeting requirement to include borrowers who do not reside in the mortgaged property or have a mortgaged property that is not within 200 miles of their mortgagee, its servicer or a branch office. The rule takes effect Jan. 1, 2025.

The American Bankers Association joined three other associations last year in urging the FHA to adopt more flexible meeting standards. “Eliminating the requirement for mortgage servicers to conduct an in-person meeting further reduces the cost and regulatory burden of servicing a nonperforming FHA loan,” they said.