The Federal Housing Administration has expanded home retention measures while Wells Fargo has loosened its jumbo lending requirements for current customers.
The Federal Housing Administration, on July 8, 2020, announced its expanded home retention measures. The initiative aims to help struggling homeowners with FHA-insured single-family mortgages keep their mortgage current after their COVID-19 forbearance ends.
The expanded loss mitigation tools will use a method the FHA refers to as "waterfall." This method involves assessing homeowners' eligibility for other options in order to make their mortgages current if they happen to be not qualified for the COVID-19 National Emergency Standalone Partial Claim.
Acting Federal Housing Commissioner Len Wolfson said that these measures would help homeowners under the COVID-19 forbearance and provide services with streamlined and tailored capabilities so they can assist homeowners quickly and efficiently.
Also announced is the availability of COVID-19 Non-Occupant Loan Modification to homeowners who currently do not occupy their FHA-insured single-family home. This measure will allow non-occupant homeowners with COVID-19 forbearance to have their mortgage rate and term modified.
Under the FHA home retention measures, borrowers are not required to make a lump-sum payment at the end of their forbearance period. Moreover, servicers are not permitted to charge penalties or fees for missed mortgage payments while the borrowing homeowner is in forbearance.
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The loss mitigation options are available for any homeowner whose mortgage is current or is less than 30 days past its due date as of March 1, 2020.
Meanwhile, Wells Fargo updated its non-conforming refinance guidelines that will see jumbo lending requirements loosened for current customers, the Housing Wire reported. As of July 1, existing customers can get a non-conforming loan to refinance with the bank. The non-conforming refinance option is also available for those who have an existing mortgage and want to refinance the loan, but they have no other deposit account.
The jumbo refinances accessible to the existing customers as long as they have a home mortgage, deposit account, equity line, investment account, brokerage account, or if they have at least $100 in their account, the report clarified.
However, prospective customers without an existing relationship with Wells Fargo will have to transfer at least $1 million in assets to qualifying Wells Fargo bank deposit, brokerage account, or investment account to be eligible to apply.
The change on the jumbo requirements updates its April announcement stating the bank would make refinance jumbo mortgages accessible only to its existing and new customers. They have at least $250,000 in assets managed by Wells Fargo for 30 days or more before the application.
The announcement comes at a time when the megabank's earnings are under pressure, a report said. Wells Fargo also tightened mortgage lending standards, including the lowering by five percent the loan size that would be approved, relative to a property's value, for the primary and secondary mortgages, an unnamed source told CNBC. The bank also raised the amount of cash needed to be on-hand by buyers after purchasing a home, from 12 months worth of expenses to 18 months.
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