The federal government is asking the mortgage industry to help unpaid federal workers and contractors with their mortgage payments because they may not be able to make those payments due to the government shutdown.
The Federal Housing Administration announced late Tuesday that it is calling on all approved mortgagees and lenders to be “sensitive to the financial hardships experienced by borrowers as a result of the shutdown,” including borrowers who are subject to furlough, layoff, or a reduction in income due to the shutdown.
Newly released data from Zillow shows that federal employees who own homes make about $249 million in mortgage payments each month. The Zillow report did not disclose how many of those have mortgages that are insured by the FHA, but the number is certainly greater than zero.
As such, the FHA is asking the mortgage industry to aid federal workers who aren’t getting paid right now because the government is shut down over funding for President Donald Trump’s border wall.
The FHA sent a letter Tuesday to mortgagees and lenders, reminding them of their “ongoing obligation to offer special forbearance to borrowers experiencing loss of income,” even if that loss of income is from the government itself.
“In accordance with longstanding policy, FHA expects mortgagees to assist borrowers experiencing a loss of income,” FHA Commissioner Brian Montgomery said in the letter.
The FHA said that it expects the mortgage industry to “make every effort to communicate with and assist affected borrowers to the greatest extent possible,” in at least the following ways:
- Extending special forbearance plans to borrowers impacted by the shutdown
- Fully evaluating borrowers for available loss mitigation options to avoid foreclosure whenever possible
Beyond that, the FHA said that it is also “strongly encouraging” all approved mortgagees and lenders to waive any late fees for affected borrowers along with suspending credit reporting on borrowers who have been affected by the shutdown.
To read the FHA’s full letter to the mortgage industry, click here.