WASHINGTON — The Federal Housing Administration is urging mortgage servicers to provide leniency to federal workers affected by the government shutdown who are struggling with mortgage payments.
FHA Commissioner Brian Montgomery sent a letter to its mortgagees Tuesday night emphasizing the agency’s policy of offering special assistance to borrowers experiencing a loss of income.
In particular, the FHA expects servicers to extend special forbearance plans to borrowers impacted by the shutdown and evaluate borrowers for loss-mitigation options to prevent foreclosure. Montgomery also advised servicers to waive late fees and suspend credit reporting for affected government workers.
An estimated $249 million of monthly residential mortgage payments are in danger of not being paid as a result of the shutdown, according to a Zillow estimate based on approximately 800,000 federal employees furloughed or working without pay.
Many mortgage servicers are already operating forbearance plans normally used in the event of a natural disaster, which require borrowers to eventually make missed payments.
The shutdown affects nearly 800,000 government employees. About 420,000 are currently working without pay and 380,000 are furloughed and not working at all.