FHA Proposes 40-year Loan Modification Rule for Borrowers, Seeks Public Comment

Originally published on April 4, 2022, by Mike Sorohan for the Mortgage Banker's Association. 

The Federal Housing Administration on Friday published a proposed rule that would increase the maximum modification loan term limit from 360 months (30 years) to 480 months (40 years).

When finalized, the proposed rule would allow mortgagees to provide a 40-year loan modification option to borrowers who may not otherwise qualify for payment reduction or other loss mitigation options. The proposal also offers an option to borrowers that are facing or experiencing financial hardship, including those that were financially impacted by the COVID-19 pandemic.

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