FHA Calls on Lenders to Be Sensitive During the Government Shutdown

By: Jenni Boucher

A recent memo from the Desk of Carol Galante, Assistant Secretary for Housing/Federal Housing Commissioner, asks that all approved mortgagees and lenders be sensitive to the financial hardships faced by borrowers as a result of the recent government shutdown.

As most of you know, funding for the operations of many federal agencies and organizations expired at midnight on September 30th, causing them to partially or fully shutdown. There are hundreds of thousands of borrowers who are being subjected to furloughs, layoffs, or a reduction of income related to the shutdown. Not just federal employees, but also private sector workers whose income partially or wholly depends on the activities of these agencies and organizations. These workers have the same ongoing financial obligations, but are forced to meet them without their usual salaries through no fault of their own. Many already have stretched budgets following sequestration furloughs.

FHA expects all approved mortgagees and lenders to make every effort to communicate with borrowers and assist affected borrowers by:

• 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

FHA also encourages these approved mortgagees and lenders to waive late fees and suspend credit reporting for any affected borrowers. FHA is partnering with Fannie Mae, Freddie Mac and the Veteran's Administration to ensure that all of the hard won improvements in the housing market are not compromised by the government shutdown.

To read more about efforts to assist affected borrows, read this announcement from Fannie Mae.