The Federal Housing Administration is giving its mortgage servicers more latitude to assist borrowers who are running into financial problems but have not yet missed a payment.
Under a new policy, servicers can offer these borrowers forbearance or even a reduction in principal under the FHA-Hamp program. Previously, the servicers could not consider these options until homeowners with an FHA-insured loan had missed several monthly payments.
"Now servicers will have additional options for those borrowers who seek help before they go delinquent, which increases the likelihood that the borrower will be able to retain their home," FHA Commissioner David Stevens said.
The FHA-Hamp program lets servicers reduce the principal amount of an FHA-insured mortgage by up to 30%.