FHA’s COVID-19 Loss Mitigation Options
August 10, 2020
The COVID-19 Home Retention Options provide options to reinstate the Mortgage after the expiration of the COVID-19 Forbearance period. Borrowers who are able to resume the monthly or the modified monthly Mortgage payments, where the Mortgage was current or less than 30 Days past due as of March 1, 2020, are eligible to be reviewed for the following streamlined COVID-19 Home Retention Options:
Owner-Occupant Borrowers are eligible to be reviewed for the:
· COVID-19 Standalone Partial Claim;
· COVID-19 Owner-Occupant Loan Modification;
· COVID-19 Combination Partial Claim and Loan Modification; and
· COVID-19 FHA Home Affordable Modification Program (FHA-HAMP) Combination Loan Modification and Partial Claim with Reduced Documentation, which may include principal deferment and requires income documentation.
Non-Occupant Borrowers are eligible to be reviewed for the COVID-19 Non-Occupant Loan Modification.
I. Processing FHA’s COVID-19 Loss Mitigation Options - If the loan was current (paid thru 2/1/2020) as of 3/1/2020 – AND the borrower states that they can resume making their payment.
Begin entering the data as usual within the FHA module of WaterfallCalc.com (WFC).
~At the top of the first page, Loan Basic tab:
Select the “Use Disaster Protocol: field defaulted to “NO” Change this to “YES” You are ready to bring the loan current.
Leave the “Special Circ. FB” field defaulted to “NO”.
Leave “Recv’d Complete LM Pkg” to default “NO”
The RFD must either be “FEMA Disaster” or “Pandemic”.
~Disaster tab, page 3:
When entering the Disaster Information on the Disaster tab, you will enter the disaster name EXACTLY as follows: COVID-19, Otherwise your calculations may be incorrect. (Include the hyphen and no extra spaces)
Property In PDMDA: field defaulted to “YES” Should be YES.
Job In PDMDA: field defaulted to “YES” Should be YES.
Disaster Forb Issued: field defaulted to “YES” Change to “NO” if a Unique Circumstance Forbearance was NOT completed prior to the partial claim.
Current Prior to Disaster: field defaulted to “YES” In order to say 'Yes' to this field for COVID-19, the loan must have been paid thru 2/1/2020 otherwise it should be “NO”. If “NO”, the borrower can be reviewed only with a full package received.
Received Income Confirmation: field defaulted to “YES”. For the COVID-19 pandemic, and for loans that fit within this subheading, this field should not be changed.
Optional remaining term: field defaults to “0”, (meaning the term defaults to 360). You have the ability to adjust the remaining term of the loan in this field. FHA does allow you to extend the term only for the months the loan is delinquent, however if this course is followed, the loan will not be able to be resold into a new GNMA pool.
The system will calculate the appropriate option, based on the occupancy of the property and if there are funds available in the statutory maximum partial claim limit to bring the loan current.
II. Processing FHA’s COVID-19 Loss Mitigation Options - If the borrower was current AND the borrower has experienced a loss of income – they must submit income documentation. The borrower must submit paystubs or other income documentation and bank statements that would support their deposits.
You DO NOT select the Disaster Protocol (it needs to follow the regular HAMP guidelines), also on the HAMP entry screen, you answer “YES” to remove the trial payments. (see below HAMP entry)
We designed the COVID HAMP this way – so it could give you flexibility to use it to correct HAMP calculations after a Trial plan, should there be some other issue, like a dramatic increase in an escrow item after the TPP was release, etc.
~Default tab, page 2: At the bottom of the 2nd page:
Enter in the borrower’s monthly gross/net income and expense information.
Leave “Include Legal’ s in Repay?” Field defaulted to “NO”.
~HAMP entry, page 4:
Use Escrow Analysis Tool: is greyed out and cannot be altered. You will be required to utilize our integrated escrow analysis tool for these calculations.
Capitalization Analysis: Capitalize Legal F/C is greyed out and cannot be altered. These loans were current at the outset of the Forbearance plan and therefore, there should be no such fees to include.
Answer “YES” to remove the trial payments ONLY if the borrower was current, has experienced a loss of income – income documentation was received and you DID NOT select the Disaster Protocol on the Loan Basics screen.
~Current Payment Information, page 5:
Spread Shortage is defaulted to “0” months, this option is recommended. This allows any projected shortage to be included in the calculations. If the loan is held by either Fannie Mae or Freddie Mac, you must select a spread range from 12 to 60 months. We will allow the inclusion of the projected out of pocket escrow and then spread the remaining shortage for these GSE loans.
WaterfallCalc.com will process the waterfall in this order:
Loan Mod (if not enough funds in Max PC to bring current)
Partial Claim and Loan mod (if loan mod P&I will increase over previous P&I)
Loan Mod (if there are no funds left in Max PC)
Disaster/PDMDAs Report was designed to supplement the filing to FHA. Can only be used when the borrower was current prior to Pandemic and with confirmation of same income from the borrower.