On June 4, 2020, the U.S. Department of Housing and Urban Development (“HUD”) issued Mortgagee Letter 2020-16 regarding the endorsement process for mortgages when a borrower has been granted a forbearance related to COVID-19 prior to the mortgage being endorsed for Federal Housing Administration (“FHA”) insurance.
Policy updates in the Mortgagee Letter supersede the requirements in HUD Single Family Housing Policy Handbook 4000.1 where they conflict but are only temporary and will not be incorporated into the Handbook. The policy updates are only effective for mortgages submitted for endorsement on or after June 15, 2020 through November 30, 2020. HUD is accepting feedback regarding the Mortgage Letter policies from interested parties for 30 calendar days from June 4, 2020.
Mortgagee Letter 2020-16 applies to all FHA Title II Single Family forward mortgage programs, except for non FHA-to-FHA cash out refinances.
The Mortgagee Letter provides that a lender may submit an eligible mortgage involving a borrower experiencing a financial hardship due, directly or indirectly, to COVID-19 who has requested or has been granted a forbearance agreement as a result of COVID-19 for insurance endorsement if:
- The borrower has requested forbearance, or the mortgage is subject to a forbearance agreement for one or more payments due to relief provided to borrowers impacted by COVID-19.
- At the time the forbearance was initiated the mortgage was current.
- At the time of closing the mortgage satisfied all requirements for FHA insurance.
- The Mortgagee executes a two-year partial indemnification agreement.
FHA Connection is being modified to identify mortgages endorsed under the requirements in the Mortgagee Letter. A mortgagee must indicate that the mortgage is subject to forbearance by selecting the “forbearance” tab under the drop down for the “Current Payments” field in FHA Connection.
Additionally, the Mortgagee Letter provides for a modified mortgagee certification on form HUD 92900-A. If a lender becomes aware of a change in a borrower’s employment status and ability to make payments as a result of COVID-19, a lender may submit a modified Mortgagee’s Certification in a separate addendum to the form stating that “the executed Mortgagee’s Certification excludes certification of knowledge of the borrower’s employment status as provided in the Form HUD 92900-A, page 4, paragraph (a).”
DocMagic has created an addendum to the form HUD 92900-A that can be provided upon request beginning on June 18, 2020 (DocMagic Form ID: 261802A2A2.VA). Please contact customer service for additional assistance.
