The Mortgage Bankers Association (MBA) voiced its support for the Federal Housing Administration’s (FHA) adoption of new loss mitigation safeguards.
In January, HUD published a new permanent set of loss mitigation tools intended to maintain streamlined processes designed to minimize burdens on mortgagees, provide sustainable loss mitigation solutions to borrowers to address delinquency, prevent foreclosure, and mitigate risks to the Mutual Mortgage Insurance Fund (MMIF).
After further review, HUD determined that additional changes are necessary to protect the MMIF. Among them, HUD determined that borrowers should be limited to one permanent Loss Mitigation Option every 24 months versus every 18 months. Also, HUD determined that certain language access provisions are unnecessarily burdensome and should be removed. Further, to swiftly address potential risks to the MMIF and taxpayers, HUD is moving the effective date of the new permanent Loss Mitigation Options to Oct. 1.
“MBA welcomes FHA’s adoption of a new, permanent loss mitigation framework, which will help evaluate performance and ensure the protection of the Mutual Mortgage Insurance (MMI) fund,” MBA’s President and CEO Bob Broeksmit said. “Specifically, we appreciate FHA’s efforts to reinstate a cap on the number of times a borrower can utilize a home-retention program and require the successful completion of trial payments to demonstrate long-term affordability.”
Broeksmit said these safeguards will improve sustainability, protect the FHA insurance fund, preserve borrower equity, and further align FHA with the GSEs.
“We commend FHA’s approach that appropriately balances borrower access to streamlined loss mitigation with prudent risk management,” Broeksmit added. “We appreciate HUD and FHA for implementing these safeguards, and we will continue to advocate for policy changes that will ensure that mortgage servicing remains efficient for both consumers and servicers.”