On June 9, NAR as part of a broad cross-section of the housing and financial services industry sent a letter to HUD Secretary, Dr. Benjamin Carson. The letter expresses the signatories concern with the recently announced Federal Housing Administration (FHA) policy requiring lenders to provide 20 percent indemnification (of the original loan amount) for up to two years in relation to borrowers who enter into forbearance due to COVID19-related hardship after closing and prior to FHA insuring their loan. Though FHA's desire to limit risk and exposure during uncertain times is understadable, the resulting burden on the lender will have the effect of severely limiting access to FHA-insured loans for homebuyers. In the interest of maintaining a well-functioning housing market during this crisis, FHA is urged to revise Mortgagee Letter (ML) 2020-16 and commit that it will insure all otherwise-eligible loans that enter into forbearance shortly after closing without any indemnification requirements or other restrictions.
Coalition Letter to HUD Secretary Carson Regarding FHA COVID - 19 Lender Forbearance Indemnification
Issue Date: June 09, 2020
On June 9, NAR as part of a broad cross-section of the housing and financial services industry sent a letter to HUD Secretary, Dr. Benjamin Carson. The letter expresses the signatories concern with the recently announced Federal Housing Administration (FHA) policy requiring lenders to provide 20 percent indemnification (of the original loan amount) for up to two years in relation to borrowers who enter into forbearance due to COVID19-related hardship after closing and prior to FHA insuring their loan. Though FHA's desire to limit risk and exposure during uncertain times is understadable, the resulting burden on the lender will have the effect of severely limiting access to FHA-insured loans for homebuyers. In the interest of maintaining a well-functioning housing market during this crisis, FHA is urged to revise Mortgagee Letter (ML) 2020-16 and commit that it will insure all otherwise-eligible loans that enter into forbearance shortly after closing without any indemnification requirements or other restrictions.
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