The Department of Housing and Urban Development today published a final rule that dramatically increases the amount of damages HUD can seek against FHA lenders that fail to engage in loss mitigation techniques. Loss mitigation options enable many homeowners who are in default on their FHA mortgage to avoid foreclosure and remain in their homes.
“We are working to ensure that every FHA borrower is afforded the opportunity to explore all options to keep their homes,” said HUD Secretary Alphonso Jackson, who was in St. Louis last week.
“Our lenders must make every effort to help people stay in their homes, help to stabilize neighborhoods and prevent losses to FHA’s Insurance Fund.”
Currently, the maximum penalty that can be imposed on lenders is $6,500 for each violation, up to a limit of $1.25 million for all violations committed during any one-year period.