February 27, 2006
HUD ANNOUNCES 120-DAY EXTENSION OF FORECLOSURE MORATORIUM TO ASSIST HURRICANE VICTIMS IN THE GULF COAST AREA
FHA Homeowners Must Contact Lenders to Qualify
WASHINGTON - Housing and Urban Development Secretary Alphonso Jackson today announced that he has directed all FHA-approved lenders to extend by 120 days HUD's moratorium on foreclosures of FHA-insured mortgages in the Gulf Coast area. The action extends a moratorium that was in effect through February 28, providing further relief for FHA-insured homeowners who have been affected by the disasters.
"By preventing the possibility of foreclosure for another four months, we want to ease the pressure on FHA-insured borrowers as they try to put their lives back together in the aftermath of the storms," said Jackson.
The extended moratorium applies to all FHA-insured loans in Presidentially-declared disaster areas eligible for individual assistance as a result of Hurricanes Katrina, Rita, and Wilma. To be eligible for the full 120-day moratorium, borrowers must make a written commitment to work with their lender on a plan to resolve their mortgage delinquency. This commitment must be received by the lender on or before March 31, 2006. Borrowers are encouraged to contact their lender as soon as possible to learn about available work-out options.
Today's action, which follows two previous foreclosure moratoriums declared by the Department, is part of HUD's ongoing effort to assist in the rebuilding of homes, lives and communities in the disaster-stricken areas of the Gulf Coast.
For more information, FHA homeowners should contact their lenders or call HUD's National Servicing Center at 1-888-297-8685.
Specific guidance for FHA-approved lenders can be found on HUD's website.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.
Questions & Answers
Re: FHA Foreclosure Moratorium Extension in Gulf Coast Area
- Who Is Eligible?
Borrowers located in areas approved for individual assistance as a result of Hurricanes Katrina, Rita and Wilma who are currently unable to maintain mortgage obligations on their FHA-insured homes.
- How long will the foreclosure moratoriums remain in effect?
HUD is extending foreclosure moratoriums for eligible FHA-insured loans directly affected by the disasters until June 30, 2006.
- Are eligible borrowers required to do anything to obtain this additional foreclosure forbearance?
Yes. By March 31, 2006, eligible borrowers must make a written commitment to work with their mortgage holder/servicer to develop and implement a plan to resolve delinquent loan payments. The foreclosure moratorium will terminate on March 31, 2006 in cases where the borrower has not made a written commitment by that date.
- Do plans to resolve mortgage defaults have to be finalized by March 31st?
No. An eligible borrower only has to make a commitment by March 31, 2006 to develop a specific plan of action and work with the mortgage holder/servicer to implement it. Borrowers and their mortgagees would then have until June 30, 2006 to finalize an implement an appropriate plan of action.
- How can a borrower make a written commitment?
The written commitment may be an application to utilize one of the FHA loss mitigation options, including Special Forbearance, Mortgage Modification, Partial Claim, Mortgage Assistance Initiative or Deed-In-Lieu of Foreclosure, or a written communication requesting additional time to work out a plan to resolve the debt.
- What efforts must a lender/servicer make to contact homeowners?
Lenders and their servicers are expected to make proactive attempts to contact affected borrowers using all reasonably available means and information. When telephone contact cannot be established, a written notice explaining available relief measures and requirements should be mailed to the borrower's last known address.
- Didn't HUD recently announce special relief measures for FHA homeowners who do go into default? Yes. On December 1, HUD announced a special Mortgage Assistance Initiative to help FHA-insured homeowners who were directly affected by the disasters, have a home that is habitable or can be repaired and are committed to continued occupancy of the property as their main residence. Under the Initiative, FHA will advance up to 12 monthly mortgage payments for borrowers in default for 120 days or more. The payments made on the borrowers' behalf are secured by an interest-free subordinate mortgage and no repayment is required until the first mortgage is paid in full.