Coalition Letter to HUD Secretary Regarding FHA Policy on Lender COVID-19 Forbearance Indemnification

On June 9, 2020, NCSHA and several other housing organizations, representing a broad cross-section of the housing and financial services industries, wrote HUD Secretary Carson to express their 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 to borrowers in forbearance due to COVID-19-related hardship after closing and prior to FHA insuring their loans. The letter urges FHA to revise Mortgagee Letter 2020-16 and commit to insuring all otherwise-eligible loans that enter into forbearance shortly after closing without any indemnification requirements or other restrictions.