FHA to Lenders: Provide 'Informal Forbearance' to Affected Borrowers

FHA to Lenders: Provide 'Informal Forbearance' to Affected Borrowers The Federal Housing Administration is urging lenders to provide temporary postponement of mortgage payments — or “informal forbearance plans” — for furloughed government employees and contractors who have been affected by the shutdown.
Banks and mortgage lenders should “make every effort to communicate with and assist affected borrowers,” FHA Commissioner Carol Galante said in a letter to lenders Friday.
FHA joins Fannie Mae, Freddie Mac and the Veterans’ Administration in urging lenders to take action to protect those federal workers impacted by the shutdown.
The FHA said that assistance should include:
* Extending informal forbearance plans to borrowers facing financial hardship as a result of the shutdown, and
* Fully evaluating borrowers for available loss mitigation options to avoid foreclosure whenever possible.
The FHA wants lenders to offer forbearance, waive late fees, suspend credit reporting and evaluate borrowers for available loss-mitigation options to prevent foreclosure, if necessary.
Forbearance plans would allow mortgage payments to be postponed for three to 12 months, depending on the borrower’s situation.
Participation by lenders is voluntary, and only applies to borrowers subject to furlough, layoff or a reduction in income because of the federal government shutdown.
“These dedicated public servants, through no fault of their own, are now forced to find a way to meet their ongoing financial obligations without their usual salaries,” Galante wrote. “In many instances these are the same employees who have already lost pay during recent sequestration-related furloughs.”

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