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FHA unveils 40-year loan modification option

The Federal Housing Administration (FHA) is moving to expand its COVID-19 loss mitigation “waterfall” by introducing a 40-year loan modification option and is asking the mortgage industry for input.

The proposed rule, published by the Department of Housing and Urban Development late last week, would change repayment provisions for FHA borrowers, allowing lenders to recast a borrower’s total unpaid loan for an additional 120 months. HUD said that this option could prevent “several thousand borrowers a year from foreclosure.”

By prolonging the length of the recast mortgage from 360 months to 480 months, borrowers will have more sustainable details ⇒

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