FHA to Continue Lending During Shutdown

Applications for all government-backed mortgages will continue to be processed during a government shutdown, according to the U.S. Dept. of Housing and Urban Development (HUD).

HUD originally said on Friday that it would stop working on applications for loans guaranteed by the FHA if the government shutdown. However, it reversed that position over the weekend.

HUD said it will continue processing loans "in order to support the health and stability of the U.S. mortgage market."

Fannie Mae and Freddie Mac also said their operations will be unaffected by the shutdown. The GSEs pay for their operations out of the fees collected from lenders.

FHA gives jobless homeowners one-year break

News Flash from CAR (California Association of Realtors)

Beginning Aug. 1, the Federal Housing Administration will extend the period for unemployed homeowners to miss mortgage payments from four months to a full year, providing qualified homeowners with more time to find employment before the foreclosure process begins. Here are the "Cliff Notes"...

• The new Special Forbearance program falls under the FHA’s Loss Mitigation program, which FHA-approved servicers must participate in. 
• The extended grace period only applies to FHA-backed loans and homeowners in the government’s foreclosure prevention program, the Making Home Affordable Program (MHA).
• In addition to extending the forbearance period and removing the up-front hurdles for borrowers, the FHA also reemphasized its requirement that participating servicers conduct a review at the end of the forbearance period to evaluate the borrower for all additional, applicable foreclosure assistance programs and notify the borrower in writing whether or not he/she qualifies for any other available option.
• If the borrower does not qualify for any foreclosure assistance option, the servicer must provide the borrower with the reason for denial and allow the borrower at least seven calendar days to submit additional information that may impact the servicer’s evaluation.
• Housing and Urban Development, which oversees FHA, hopes private lenders and government-controlled Fannie Mae and Freddie Mac will adopt a similar policy.

For additional information on the program, including eligibility and requirements, please visit http://www.makinghomeaffordable.gov/.

The full story is here.