March 22, 2023

fha loan workouts

FHA extends covid 19 era loss mitigation offerings and expands foreclosure protections to all high risk borrowers.

(FHA) announced in Mortgagee Letter 2023-02 that it is expanding loss mitigation options created during the COVID-19 pandemic to help all homeowners with FHA loans avoid foreclosure.

Per Julia Gordon: “FHA’s COVID-19 forbearances and streamlined COVID-19 loss mitigation options have successfully helped millions of struggling borrowers in the last two fiscal years alone. Our action today lets us capitalize on what we have learned through the pandemic to continue helping borrowers avoid foreclosure, regardless of the nature of their hardship.”

The changes are effective through October 30, 2024:


  • FHA-HAMP Options are temporarily suspended and mortgagees must instead evaluate all Borrowers for the COVID-19 Recovery Home Retention Options.
  • FHA Standard PFS is temporarily suspended and Mortgagees must evaluate all eligible Borrowers for the COVID-19 PFS instead.
  • Standard DIL is temporarily suspended and Mortgagees must evaluate all eligible Borrowers for the COVID-19 DIL.
  • The HUD partial claim limit has been raised from 25% to 30% of the unpaid principal balance as of the date of default.
  • COVID-19 Recovery loss mitigation options are extended to all eligible borrowers, including non-occupant borrowers, regardless of the nature of their hardship.
  • The definition of imminent default is updated to include borrowers who qualified for U.S. Department of the Treasury’s Homeowner Assistance Funds (HAF).
  • Incentive payments will be provided to servicers for the successful completion of COVID-19 Recovery options.


FHA Covid 19 loss mitigation options are similar to standard FHA loss mitigation options, but with looser regulations. There's never been an easier time to resolve your FHA loan default, or to do a short sale with FHA!

We specialize in FHA SHORT SALES!

I was about to give up and just turn my back on my home and walk away. However, I found Minna and she was a lifesaver! Other realtors tried to help me but made the situation worse and wasted my time. If you are in the unfortunate place of having to short sale your home, then you know it can be embarrassing and difficult, especially if you don't have real estate experience. Minna knew exactly what to do, and was very professional, knowledgeable, and, kind. Minna was on my side and handled all the challenges we faced with selling a house that at times seemed like it didn't want to be sold! I appreciate Minna and know that you will love her.


Last Updated on March 22, 2023 by Minna Reid

About the author 

Minna Reid

Minna Reid is The Broker - Owner of Reid Real Estate Group. Reid Real Estate Group is a full-service Connecticut residential real estate brokerage, specializing in helping homeowners with legal and financial challenges including short sales, probate sales and tax lien complications.

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