MReport May 2021

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40 | M R EP O RT SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T FHA Updates Servicing Section of Its Single-Family Handbook The changes will help streamline and enhance servicing requirements, adding consistency with industry practices and reducing barriers to servicing FHA-insured mortgages, according to the administration. F ederal Housing Ad- ministration (FHA) has announced updates to its Single-Family Handbook, which it says will strengthen loss- mitigation approaches for strug- gling borrowers while streamlin- ing servicer requirements. "The update to FHA's Servicing and Loss Mitigation section of the FHA Single-Family Housing Policy Handbook streamlines many standard operational requirements for mortgage servicers, including re- vising FHA's loss mitigation home retention waterfall so that servicers can more quickly offer effective loss mitigation home retention options to borrowers in danger of losing their homes to foreclosure," FHA stated in a press release. Additional changes streamline and enhance many servicing re- quirements to provide more con- sistency with industry practices and reduce barriers to servicing FHA-insured single-family mort- gages, according to FHA. "With these updates, we have strengthened the ability of servicers to reach and help more struggling borrowers with FHA-insured mortgages, more quickly," said Principal Deputy Assistant Secretary for Housing Lopa Kolluri. "The updates to our policies will ensure quality servicing activities, streamline ser- vicing requirements, more closely align our servicing policies with industry servicing practices, and improve outcomes." FHA says the described policy changes—based on rigorous in- ternal analysis and extensive public feedback—will improve the effectiveness and efficiency of FHA's servicing policies. Changes announced today also augment FHA's actions earlier this year to provide urgent and immediate support to the nation's homeown- ers struggling to make their mort- gage payments due to COVID-19. • A revised loss mitigation waterfall that allows servicers to review struggling borrow- ers for a permanent FHA Home Affordable Modification Program (FHA-HAMP) home retention option without a lengthy forbearance, which has been proven to be highly effective at helping borrowers avoid redefault and foreclosure; • Streamlined documentation requirements to avoid unneces- sary delays and to align more closely with standard industry servicing practices, including re- moving signature requirements on Trial Payment Plans; and • A revised structure for certain allowable costs and fees that cor- responds with fee structures used by other industry participants. "The work completed responds to feedback we've received about the complexity and cost of servic- ing FHA-insured mortgages," said Acting Associate Deputy Assistant Secretary for Single- Family Housing Julie Shaffer. "FHA requirements will continue to reflect our high expectations of servicers and updating our pro- cesses and addressing outdated and unnecessary requirements will improve the program for borrowers and servicers."

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