How the FHA’s adjustments will rework foreclosures options

The upcoming changes to the Federal Housing Administration’s options for distressed mortgage borrowers reveal how the pandemic has permanently reshaped the way loss mitigation is handled.

The changes at the FHA, which go into effect April 30, incorporate consumer and servicer feedback related to how pandemic foreclosure alternatives worked in practice. A continued review of their effectiveness will take place for the next 18 months.

The Housing Policy Council, a group that represents both contingents, indicated that the balance of considerations for servicer and borrower is remarkable and shows a lot of attention to points each have raised, while leaving room for future adjustments.

“We do feel like this reflects engagement between the government agencies, FHA, in particular, and not only the industry, but the consumer advocacy community,” said HPC Executive Vice President Meg Burns.

Here are a few ways the FHA’s changes transform procedures to address industry and consumer concerns.