The Federal Housing Administration has broadened the parameters for its COVID-19 loss mitigation options while suspending others, and is also adding incentive payments for servicers.

The relief previously only available to people with pandemic hardships has been opened up to all borrowers with imminent defaults, including non-occupants. 

Due to this expansion, the administration and Department of Housing and Urban Development have suspended Home Affordable Modification Program, pre-foreclosure sale and deed-in-lieu options it previously had available for those without COVID-19 hardships.

In addition to expanding the range of eligible borrowers, the FHA is increasing the maximum partial claim amount for two programs to 30% from 25%. That increase will be applied to the  COVID-19 recovery standalone partial claim and modification programs.

Servicers can optionally adopt the policy changes related to COVID-19 recovery options any time between now and April 30, when they become mandatory.

Mortgage companies will only receive incentive payments when borrowers are able to successfully complete options. Claims must be submitted within 60 days of the execution date.

Payments range from $250 to $1,000 depending on the type of option completed, with a deed-in-lieu option at the lower end of the scale and a recovery modification closer to the upper end. Title-related expenses may be reimbursed in the case of a modification.

The changes follow a push to make some of the temporary loss mitigation programs extended to borrowers with pandemic-related hardships permanent at the Consumer Financial Protection Bureau and the Urban Institute, a think tank with ties to current and former housing officials.