Tools streamline process for early implementation
WaterfallCalc, a company specializing in mortgage servicing technology, said it has the necessary tools to help servicers handle the upcoming changes in FHA's payment plan.
The Department of Housing and Urban Development (HUD) has introduced a new program called the Payment Supplement Agreement (PSA) to help struggling FHA borrowers.
The program offers relief to borrowers by combining a partial claim from FHA to bring their loan current with a monthly principal reduction that lowers their monthly payment for three years. This allows borrowers to keep their existing, potentially lower, interest rates while reducing their overall monthly burden.
However, most servicing systems are not set up to handle the FHA’s new payment policy.
WaterfallCalc has released the necessary documentation and automated claim process for the program before the January 2025 deadline set by HUD.
“The PSA program is both innovative and smart, but creates multiple challenges for mortgage servicers,” WaterfallCalc founder Donna Schmidt said in a news release. “But if a servicer can find an adequate workaround, the fact that WaterfallCalc has the calculations, documents and FHA claim filing ready to go can mean that our clients are well ahead of the game.”
Schmidt highlighted several benefits of implementing the program now rather than waiting until the January 2025 deadline. Borrowers can keep their low interest rates while reducing payments and receiving immediate financial relief. Servicers can also better position themselves to retain loans and reduce runoff rates if interest rates drop in the future.
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"We have a long track record of being the first out of the gate when new loss mitigation requirements are handed down," Schmidt said. "Being able to implement the PSA program today means our clients can stay compliant and reduce their losses while struggling borrowers receive the assistance they need to keep their homes—which has been our primary mission since day one."
The PSA uses fewer partial claim funds, up to 60% less, to help servicers meet the 25% payment reduction goal, making more funds available if borrowers need additional assistance later.
Mortgage servicers working with DLS Servicing can implement the PSA in as little as two days, according to Schmidt, and receive advice, training, and practical strategies for navigating the program's complexities.
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