Homeowners with loans insured by the Federal Housing Administration (FHA) experiencing financial hardship now are eligible for loss mitigation assistance prior to defaulting on their mortgage, the Dept. of Housing and Urban Development announced Friday.?? Previously, borrowers with FHA-insured loans were not eligible for such assistance until after they had missed payments.
FHA also issued guidance to FHA-approved loan servicers on how to assist FHA borrowers who are facing ???imminent default,??? defined as an FHA borrower who is current or less than 30 days past due on the mortgage obligation and is experiencing a significant reduction in income or some other hardship that will prevent him or her from making the next required payment on the mortgage during the month that it is due.
To become eligible, borrowers must be able to document the cause of the imminent default which may include, but is not limited to, a reduction in, or loss of, income that was supporting the mortgage; or a change in household financial circumstances.
Loan servicers must document the basis for its determination that a payment default is imminent and retain all documentation used to reach its conclusion. The servicer???s documentation must also include information on the borrower???s financial condition.
Copyright?? 2010, California Association of REALTORS?? (C.A.R.).?? Used with permission provided by the C.A.R. Legal Department.??
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