WASHINGTON—The Department of Housing and Urban Development (HUD) has finalized a rule to allow a standalone 40-year loan modification for mortgagees with Federal Housing Administration (FHA)-insured loans to cure a borrower’s default.
In response, NAFCU said it supports the rule, adding it believes it would make homeownership more affordable and support generational wealth building.
The modification would recast mortgagee’s total unpaid loan for a new term limit of 480 months. The rule aligns HUD’s rules with those of the government-sponsored enterprises, the NCUA, the Department of Agriculture, the FDIC, and the Office of the Comptroller of the Currency.
‘Not Affect Safety & Soundness’
In comments on the proposed rule, NAFCU said it is important there is parity among lenders within the housing finance system and said longer term options would not affect safety or soundness. The association also indicated such a modification would incentivize more credit unions to become FHA lenders, providing their members with more options for mortgage lending.
The rule was finalized without changes from the proposal. It takes effect May 8.
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