HUD announces third FHA hurricane foreclosure moratorium.

The Department of Housing and Urban Development (HUD) has directed all Federal Housing Administration-approved (FHA-approved) lenders to extend HUD's moratorium on foreclosures of FHA-insured mortgages in the Gulf Coast region.

HUD's action extended by 120 days the moratorium that was set to expire on Feb. 28, according to HUD Secretary Alphonso Jackson.

"By preventing the possibility of foreclosure for another four months, we want to ease the pressure on FHA-insured borrowers as they try to put their lives back together in the aftermath of the storms," said Jackson.

HUD's third foreclosure moratorium applies to all FHA-insured loans in presidentially declared disaster areas eligible for individual assistance as a result of Hurricanes Katrina, Rita and Wilma. Eligible borrowers must make a written commitment to work with their lender on a plan to resolve their mortgage delinquency, said HUD.

HUD's action followed a letter issued by Fannie Mae earlier in February, which updated the firm's guidance on servicing and underwriting issues following the Gulf Coast hurricanes.

Among other provisions, the letter addressed continuing forbearance; established a moratorium through May on foreclosures in several counties and parishes; and provided guidance to assist servicers when determining whether to begin, continue or recommend a foreclosure.

Freddie Mac had already issued a similar bulletin the previous month (see Mortgage Banking, March 2006, p 8).