HUD Revises Effective Date for Recent Updates to FHA Loan COVID-19 Guidance

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As previously reported, the U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2020-23, dated July 28, 2020, to update COVID-19 national emergency guidance for FHA loans. The guidance addresses the verification of business operations for self-employed borrowers, the use of rental income for qualification purposes, and rehabilitation escrow accounts in connection with 203(k) loans. As originally announced, the guidance on the first two topics was effective for cases with note dates on or after July 28, 2020 through November 30, 2020. On July 29, 2020, HUD issued Mortgagee Letter 2020-24 to revise the effective date so that the guidance is now effective for case numbers assigned on or after August 12, 2020 through November 30, 2020. The originally announced effective date for the guidance on 203(k) loans remains the same—it became effective immediately for open escrow accounts through November 30, 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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