Removing Barriers Blog

CUNA and Joint Trades Pen Letter to HUD Secretary Carson on Lender Forbearance Indemnification
Posted June 11, 2020 by dyi

CUNA signed on to a letter with several joint trades to HUD Secretary Carson to express concern with the recently announced Federal Housing Administration (FHA) policy requiring lenders to provide 20 percent indemnification (of the original loan amount) for up to two years in relation to borrowers who enter into forbearance due to COVID19-related hardship after closing and prior to FHA insuring their loan.

" While we understand FHA’s desire to limit risk and exposure during uncertain times, we believe the resulting burden on the lender will have the effect of severely limiting access to FHA-insured loans for homebuyers," the letter states. "In the interest of maintaining a well-functioning housing market during this crisis, we urge FHA to revise Mortgagee Letter (ML) 2020-16 and commit that it will insure all otherwise-eligible loans that enter into forbearance shortly after closing without any indemnification requirements or other restrictions."