HUD Homes / VA Homes News

The U.S. Department of Housing and Urban Development announced late last month that FHA-insured families who have problems associated with bad Chinese drywall may be eligible for assistance to help them rehabilitate their properties.

FHA is reminding its lenders that they need to offer special foreclosure for borrowers suffering the sudden effects of damaging drywall products in their homes, including the hardship associated with related home repairs.

"We're instructing our FHA mortgage lenders nationwide to extend temporary relief to allow these families time to remove problem damaging drywall and repair their homes," said FHA Commissioner David Stevens.

An FHA Type 1 Special Forbearance provides relief that is not typically available under an informal forbearance or repayment plan. This relief provided can include one or more of the following remedies:

* Suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of default;

* A period during which the borrower is only required to make their regular monthly mortgage payment before beginning to repay the arrearage; or

* A repayment period of at least six months.

HUD is instructing lenders that no late fees are to be assessed while the borrower is making timely payments under the terms of the Special Forbearance plan.

The total arrearage for a Type 1 Special Forbearance cannot exceed 12 months of delinquent payments.

Any questions or clarification regarding the Type 1 Special Forbearance should be directed to the HUD National Servicing Center at 888-297-8685.