FHA revises its home retention program

Yesterday, The Federal Housing Administration (FHA) announced changes to its loss mitigation program, which helps homeowners avoid foreclosure.

FHA revised some of the qualifications and rules in its Loss Mitigation Home Retention Options, which allows some owners to qualify even if they didn’t a week ago. FHA says it’s also boosting its level of assistance for at-risk owners.

FHA says the change will also help the administration. By avoiding full-blown foreclosures, FHA’s Mutual Mortgage Insurance Fund won’t have to make up a complete loss. That would keep FHA more solvent and avoid, possibly, a federal bailout for the first time in FHA’s history.

“Not only are we taking steps to make sure more borrowers can benefit from FHA loss mitigation assistance, but we’re also targeting our assistance to provide more sustainable payments for borrowers … over the long term,” says Acting FHA Commissioner Carol Galante. “At the same time, these efforts will reduce losses to FHA from foreclosures, benefiting our insurance fund.”

The entire list of changes can be found in FHA’s Mortgagee Letter 2012 – 22.

FHA lender/servicers have no longer than 90 days after issuance of this Mortgagee Letter to begin assessing delinquent borrowers under these new guidelines.