The Federal Housing Administration told mortgage servicers that they can now offer a 40-year loan term as a COVID-19 recovery option.
Servicers for FHA-insured mortgages can offer the modification immediately, according to the latest update to FHA’s mortgage lending policies. For now, only borrowers financially impacted by the pandemic can opt for the loss mitigation option, and it may only be used in combination with a partial claim option.
The administration said that the new loss mitigation option could be an alternative for borrowers who cannot reduce their principal and interest payments by 25% through FHA’s existing 30-year mortgage modification with a details ⇒
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