The Federal Housing Administration has released a long awaited proposal that would change
Under the new proposal, which is aimed at updating the Department of Housing and Urban Development's "face-to-face" requirements, mortgage servicers would be able to use online and remote communications, as
The mortgage industry has been watching for the proposal since Julia Gordon, FHA commissioner and assistant secretary for housing, announced
The new foreclosure-prevention proposal "would align with advances in electronic community technology and borrower engagement preferences while preserving necessary consumer protections," according to the FHA's new information bulletin.
Under the new proposal, servicers would no longer have to physically go to the property to try to schedule a meeting with borrowers who have FHA-insured loans, and could use the aforementioned automated methods in early default intervention.
However, the proposal does expand the scope of outreach to include some types of borrowers previously exempted: those not living in the subject property or who don't have mortgaged land within 200 miles of their lender/servicer or its branch office.
"Given these expanded methods of engagement permitted and recent FHA policy updates that make loss mitigation options available to mortgagors who do not reside in the mortgaged property, HUD proposes to eliminate two of the exemptions to the meeting with the mortgagor requirement," the department said in its proposed rule.
A partial waiver from face-to-face requirements issued during the pandemic is still currently in place through the end of this year.
The FHA is accepting comments on the proposed updates to the requirements through Sept. 29, and cautioned mortgage companies not to use them prematurely.
"This proposed rule is not official policy until finalized and may not be used in connection with any FHA-insured mortgages," the agency said in its information bulletin.
