Letters to Regulators: Letter Urging HUD to Provide 12 Months Forbearance to FHA-Insured Borrowers

July 1, 2021

Lopa P. Kolluri
Principal Deputy Assistant Secretary
Office of Housing – Federal Housing Administration
Department of Housing and Urban Development
451 7th St S.W.
Washington, D.C. 20410

RE: Comment to Mortgagee Letter 2021-15

Dear Deputy Assistant Secretary Kolluri:

On behalf of the clients and communities we represent, we urge HUD to give FHA-insured
borrowers who start forbearance plans after July 1, 2021 access to a full twelve months of
forbearance in line with policies from the Government Sponsored Enterprises (GSEs), the
Department of Veterans Affairs (VA), and the Department of Agriculture (USDA).

In Mortgage Letter 2021-15, HUD extended the deadline for borrowers to access initial COVID19 forbearance plans from June 30, 2021 to September 30, 2021. In doing so, HUD rightfully recognized the continued economic turmoil from the pandemic. HUD’s decision, however, unnecessarily limited forbearance for borrowers accessing plans after June 30, 2021 by providing only six months of relief instead of the standard twelve months pursuant to the CARES Act. The VA and USDA did not include a similar six-month limitation in their
announcements to extend the forbearance deadline. The GSEs also have no such limit.

HUD’s limit on forbearance for reverse mortgage borrowers (through “HECM extension
periods”) is problematic for the additional reason that many reverse mortgage borrowers will
have to rely on Homeowner Assistance Fund (HAF) programs that are not yet operational.
Servicer concerns about how they may be financially penalized by HUD for delaying
foreclosures may create a further incentive to foreclose.

HUD should not be alone in imposing an unnecessary time limit on forbearance especially given how hard FHA-insured borrowers have been hit by the COVID-19 pandemic. While it is true that COVID-19 cases have reduced, the ripple effects of the pandemic have continued, and we do not yet have a full recovery. Borrowers may still have COVID-19 hardships that require forbearance, and HUD should not limit their access.

We thank you for your continued work on behalf of borrowers facing COVID-19 hardships and for your continued dialogue with advocates.

View or download a PDF of the letter here.