Some homeowners might be surprised to learn about new financial relief for the financial effects of COVID-19, but the FHA and HUD made an announcement in the last month of 2022 — there are new options for those who struggle financially due to COVID.
Specifically, there are new options for relief for qualifying senior citizens trying to keep their homes while struggling to make property tax payments on homes securing Home Equity Conversion Mortgage (HECM) loan payments.
The issue for these homeowners? One requirement of the FHA HECM program is that the borrower stay current on all so-called property charges such as property taxes and homeowner’s association dues where applicable.
In ordinary circumstances, if an FHA HECM borrower does not stay current on these charges, they face loss of the home through foreclosure.
But a new FHA program provides another option for homeowners, at least until the official end of the COVID-19 national emergency.
A program called the FHA COVID-19 HECM Property Charge Repayment Plan allows participating FHA lenders to offer up to five years to repay delinquent property charges, such as taxes and homeowners insurance” and provides the lender the ability to provide “advances on the homeowner’s behalf” when the borrower can’t make the payment themselves.
For senior homeowners, “recovering from the financial effects of the pandemic may be especially challenging,” according to Federal Housing Commissioner Julia Gordon, who was quoted in the press release.
Gordon adds that this new option ”…will give more seniors behind on their property charges the opportunity to fulfill the obligations of their HECM and remain in their homes.”
Without the relief plan, a borrower could risk having the entire HECM loan declared due and payable when the property taxes or other obligations are dealt with according to the agreement.
Under the FHA’s new COVID relief plan, FHA HECM borrowers may be offered a repayment plan regardless of the dollar amount of property charge payments owed and even if they have already participated in certain other repayment programs.
These homeowners may be offered a repayment plan for as long as 60 months. It may be an option for up to a full year following any declared end to the COVID-19 National Emergency according to HUD.gov.
To qualify for this COVID relief for HECM mortgages, borrowers must submit documentation showing they were financially affected by COVID-19.
Not sure how this new COVID-19 relief option might work for you or under what circumstances you may become eligible for it? Call your loan servicer as soon as possible, even if you are already on some other repayment plan.
It is possible you may also qualify for the new FHA HECM loan relief option–don’t assume you don’t qualify just because you participated in a previous repayment option.
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