Michigan Attorney General Dana Nessel has joined a coalition of 20 attorneys general urging the federal government to take critical and needed action to help borrowers by addressing failures to implement mortgage restructuring programs to ensure those most financially impacted by the COVID-19 pandemic can afford their mortgages and remain in their homes.
During the pandemic, the Federal Housing Administration (FHA) has helped borrowers in need remain in their homes by implementing payment pauses and forbearance programs. The agency has implemented COVID-19 Recovery Loss Mitigation Options to help borrowers in need who were unable to pay the cost of their pre-pandemic mortgages plus the arrears that had accrued during forbearance.
These programs aim to help families lower their principal and interest so that they have affordable monthly mortgage payments that allow a sustained and stable financial recovery — specifically for low-income households, first-time homeowners, and households of color disproportionately affected by the pandemic.
All lenders of FHA-insured loans were required to implement these programs by no later than October 21, 2021.
In a letter — led by District of Columbia Attorney General Karl A. Racine — to the FHA, the attorneys general detail that several mortgage loan servicers employed and approved by FHA have failed to adequately implement the FHA COVID-19 Recovery Modification, as well as other COVID-19 relief programs to support borrowers.
The letter calls on the FHA to ensure that its approved and employed mortgage loan servicers are taking the necessary steps to implement the FHA COVID-19 Recovery Modification in its entirety.
“At a time when so many face ongoing financial hardships, we must deliver on assurances provided to those who are struggling,” Nessel said. “I join my colleagues in urging our federal partners to verify proper implementation of this vital program.”
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