In response to the COVID-19 pandemic, the Federal Housing Administration (FHA) has announced additional “flexibilities” to support elderly homeowners with Home Equity Conversion Mortgages (HECMs) insured by the FHA who are falling behind on their necessary property charge payments.
With the help of the new COVID-19 HECM Property Charge Repayment Plan, mortgage servicers can provide qualified homeowners up to 5 years to pay back property costs, such as taxes and homeowners insurance, that they advanced on their behalf.
According to Federal Housing Commissioner Julia Gordon, recovering from the pandemic’s financial consequences may be especially difficult for senior homeowners. More seniors who are late on their property charges will have the opportunity to complete their HECM obligations and stay in their residences, thanks to the new repayment plan option.
Property costs must be paid by homeowners to maintain their HECM. They are declared to be in default and their mortgage servicer is required to advance money to cover the property costs if they are unable to continue making these payments. Foreclosure may occur if a property charge default is not resolved.
Servicers may present homeowners with a repayment plan to pay back the advances made by the servicer to correct the failure. The regular FHA HECM property charge repayment policy only allows for a total repayment period of 60 months.