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Highlight Updates COVID-19 Combination Partial Claim and Loan Modification

Significant Law Change

If the borrower indicates that a payment pursuant to the COVID-19 Owner-Occupant Loan Modification is not affordable, the servicer should then evaluate for the COVID-19 Combination Partial Claim and Loan Modification. This option includes a loan modification that capitalizes the arrears, extends the term to 360 months, sets the interest rate at HUD’s current market rate, and then also provides for a partial claim. In this way, it is similar in structure to the standard FHA-HAMP, which can also use a combination of loan modification and partial claim. Unlike FHA-HAMP, there is no target payment. In addition, the borrower does not submit financial documents. According to HUD, the amount of the partial claim only covers arrears and does reduce the principal balance of the loan. Any partial claim is subject to the statutory partial claim maximum.103


  • 103 HUD, Mortgagee Letter 2021-05 at 10–11.