FHA Clarifies Loss Mitigation Options for Certain Non-Borrowers

FHA recently published Mortgagee Letter 2023-11 (ML) to clarify and update Mortgagee Letter 2023-03.  Specifically, the ML allows for review of non-borrowers for certain loss mitigation options if title was acquired through an exempted transfer and the non-borrower is in default or imminent default.  This ML applies to single-family forward mortgages.

With this ML, non-borrowers who acquired title through an exempted transfer, for example certain property transfers to a survivor after death of the borrower, are eligible for loss mitigation through the FHA-Home Affordable Modification Program (FHA-HAMP), Pre-Foreclosure Sale, and Deed-in-lieu of Foreclosure, but not eligible for FHA’s COVID-19 Recovery Options.

The ML must be implemented by July 21, 2023, but may be implemented immediately.