The COVID-19 pandemic has led many Iowa homeowners to seek mortgage relief, which results in HUD filing subordinate partial claim mortgages against the property. Therefore, with approximately 850,000 homeowners exiting the forbearance program in the first wave, they must decide whether to continue making payments, modify their loan, or sell their home. This blog post provides an overview of the COVID-19 recovery options available to Iowa homeowners with FHA-insured mortgages.
On July 23, 2021, the Federal Housing Administration (FHA) announced streamlined COVID-19 Recovery options to help homeowners with FHA-insured mortgages who’ve been financially affected by the pandemic. The program simplifies the COVID-19 Recovery waterfall allowing eligible homeowners a reduction in the principal and interest portion of their payments. The new program reduces the required documentation and allows mortgage servicers to provide greater payment reduction for eligible homeowners with FHA-insured Single Family Title II forward mortgages. The program aims to aid at-risk homeowners, including low-income, people of color, and first-time homeowners.
The COVID-19 Standalone Partial Claim can assist homeowners with repayment. This option enables placing mortgage payment arrearages in a zero-interest subordinate (junior) lien against the property. To be eligible, the homeowner must have been current or less than 30 days delinquent as of March 1, 2020. When the mortgage ends, the homeowner will repay the lien. FHA revised COVID-19 Standalone Partial Claim for homeowners who can resume payments.
COVID-19 Recovery Modification extends mortgage to 360 months for struggling homeowners. The aim is to decrease the borrower’s monthly principal and interest part of their monthly mortgage payment. If Partial Claim funds are available, the COVID-19 Recovery Modification must include a Partial Claim.
Consult Danilson Law firm for questions about the COVID-19 mortgage relief partial claims process. We offer unique real estate expertise to Iowa homeowners with FHA-insured mortgages.