FHA Responds To COVID-19: Temporarily Waives Face-To-Face Interview Requirement And Extends Annual Recertification Deadline

In response to the significant developments regarding COVID-19, on March 14, 2020, the US Department of Housing and Urban Development ("HUD" or "Department") issued a temporary waiver of its face-to-face interview requirement for servicers of delinquent Federal Housing Administration ("FHA") loans. HUD also extended the deadline to complete the annual recertification process for FHA-approved mortgagees with fiscal years ending on December 31, 2019, and issued Frequently Asked Questions ("FAQs") to provide guidance to FHA participants on other important topics related to the impacts of COVID-19. This Legal Update provides details regarding these announcements.

Temporary Waiver of the Face-to-Face Interview Requirement

In direct response to public health concerns around the spread of COVID-19, HUD issued FHA Info #20-20 to announce a partial waiver of the regulation and section of HUD Handbook 4000.1 that require servicers to conduct, or make reasonable efforts to arrange, a face-to-face interview with delinquent FHA borrowers. Both the regulatory waiver and the waiver of HUD Handbook 4000.1 Section III.A.2.h.xii. were effective immediately as of March 13, 2020, and will extend for a 12-month period from that date.

Currently, the Department's regulation and Handbook guidance require mortgagees to have a face-to-face interview with the borrower, or make a reasonable effort to arrange a face-to-face interview, no later than the 61st day of delinquency, unless the loan meets one of a few limited exceptions.1 The Department's waivers allow mortgagees, in lieu of face-to-face interviews, to use alternative methods for contacting borrowers in early delinquency to meet HUD's early default intervention requirements. Specifically, the waivers permit contact with delinquent borrowers through phone interviews, email or video calling or conferencing technology and provide examples of such technology including, but not limited to, Skype, Zoom, Webex, Microsoft Teams, FaceTime and GoToMeeting.

Through these alternative methods, servicers are still required to assess the borrower's circumstances and determine appropriate repayment plans. Servicers also remain required to inform the borrower: (i) that HUD will make information regarding the status and payment history of the borrower's loan available to local credit bureaus and prospective creditors; (ii) of other available assistance, if any; and (iii) of the names and addresses of HUD officials to whom...