Published: July 2022

40-year loan term would offer another option for payment relief for struggling mortgage borrowers

Consumer Action was one of 19 advocacy organizations writing in support of HUD’s proposed change that would increase the maximum payment term of a loan modification from 360 months to 480 months, providing an additional tool for HUD to provide payment relief to borrowers who need it.

Consumer Action and more than a dozen other advocacy organizations wrote to the Department of Housing and Urban Development (HUD) expressing support for the agency’s proposed amendment to existing regulations that would increase the maximum payment term of a loan modification from 360 months to 480 months. Mortgage interest rates have climbed by approximately 225 basis points in the past year, and there are approximately 350,000 FHA-insured borrowers in seriously delinquent status. Elevated interest rates make it challenging to provide the targeted payment relief that HUD seeks to achieve for the many borrowers who need it. The 480-month modification term would, in particular, provide needed assistance to borrowers who have already used their “partial claim”—an interest-free loan from HUD—since these borrowers have few, if any, other options for payment reductions.

Lead Organization

National Consumer Law Center

More Information

Read the letter here.

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