In March, HUD published a proposal in the Federal Register to create a 40-year option for existing FHA borrowers, a move NAR backed in a comment letter.
WASHINGTON – At-risk homeowners with a Federal Housing Administration (FHA) mortgage will likely have a new option to keep them in their homes: A 40-year mortgage.
The Department of Housing and Urban Development posted the proposal in the Federal Register two months ago and interested parties had a comment period that ended on May 31, 2022. In a response published today, the National Association of Realtors® (NAR) commented and backed the proposal.
NAR President Leslie Rouda Smith says the association supports HUD’s proposal, which would allow the FHA to recast existing mortgages to terms of up to 480 months, calling it an “important tool to help struggling homeowners.”
In the letter, Rouda Smith says, “Realtors® were concerned about the impact of the pandemic on the housing market and urged action to protect homeowners and homebuyers. Today, the FHA faces a new challenge as 9.58% of its borrowers were in some stage of delinquency during the first quarter of 2022. The FHA will need new tools to help these borrowers sustain homeownership or to help ease their transition.”
She also says borrowers need flexibility, notably those with unique circumstances. The 40-year loan would help “support homeownership and stability of the market. Furthermore, both Fannie Mae and Freddie Mac effectively use this tool to support homeowners during stress events demonstrating its merit.”
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