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NAFCU Reg Alert reviews HUD proposed rulemaking to increase FHA insured mortgage loans to 40 years
NAFCU Wednesday sent members a Regulatory Alert regarding the Department of Housing and Urban Development’s (HUD) recently published notice of proposed rulemaking (NPRM) inviting comment on its proposal to allow mortgagees to modify a Federal Housing Administration (FHA) insured mortgage from a 30-year term limit to cure a borrower’s default to 40 years.
The proposed rule would directly impact credit unions, as HUD would align with the government-sponsored enterprises (GSEs), the National Credit Union Administration (NCUA), and the United States Department of Agriculture (USDA) to ensure that FHA borrowers receive comparable opportunities for home retention.
Through the Regulatory Alert, NAFCU highlights:
- increasing the maximum term limit to 480 months would allow mortgagees to reduce the borrower’s monthly payment as the outstanding balance would be spread over a longer time frame;
- a lower monthly payment is a key element to bring the mortgage current, prevent imminent re-default, and keep the borrower in their home while continuing to build wealth through homeownership; and
- the FHA also added a 40-year mortgage modification option for mortgage servicers to use with its partial claim option for FHA Title II forward mortgages.
NAFCU also provided a list of questions to consider when determining whether to support or oppose the proposed rulemaking. Comments on the notice and request for comment are due to NAFCU May 12 and can be submitted through the alert; comments are due to HUD May 31.
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