Earlier this month, the FHA published its final rule in the Federal Register titled “Modernization of Engagement with Mortgagors in Default.” (Docket No. FR-6353-F-02)

As USFN has previously written, this final rule allows servicers to utilize electronic and other remote communication tools, among other things, to conduct interviews to satisfy the early intervention requirements. This final rule, which will become effective on January 1, 2025, updates HUD’s current regulation (24 CFR 203.604) that requires mortgagees to meet in person with borrowers who are in default on their mortgage payments.

HUD’s updated regulation will align with advances in electronic communication technology and borrower engagement preferences while preserving necessary consumer protections. This final rule takes into consideration public comments received in response to the proposed rule [Docket No. FR-6353- P-01], published on July 31, 2023, as USFN reported in the August 9, 2023 USFNews. 

On August 14, the Federal Housing Administration (FHA) posted a draft Mortgagee Letter (ML), Modernization of Engagement with Borrowers in Default, on its Single Family Housing Drafting Table (Drafting Table) for review and feedback. The draft ML proposes policy that would align with the provisions outlined in the final rule, Modernization of Engagement with Mortgagors in Default published in the Federal Register [FR-6353-F-02] on August 2, 2024. Interested stakeholders are encouraged to review the draft ML and provide feedback through September 13, 2024. Instructions for viewing the draft ML and providing feedback are available on the FHA Single Family Drafting Table. As a reminder, this draft ML is not official departmental policy and cannot be used in connection with any FHA-insured mortgage until finalized. FHA’s existing policies remain in effect until amended.  

The waivers permitting mortgagees to use electronic and remote means of communication during the COVID-19 pandemic remain in effect and were extended through January 1, 2025, unless the final rule amending 24 CFR § 203.604 and a ML or Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1) update amending Section III.A.2.h.xii. become effective prior to that date.