crfs recaps FHA’s COVID-19 loss mitigation options

Mortgagee Letter 2020-22 released in July introduced a full suite of COVID-19 Loss Mitigation options available to borrowers who are affected by the COVID-19 Presidentially Declared National Emergency. These options expand upon the COVID-19 Forbearance and COVID-19 Standalone Partial claim introduced in ML 2020-06. For additional details, visit the HUD website –

This mortgagee letter also introduces a new SFDMS code 053 – Combination Partial Claim/Modification Started (Non HAMP). This code is effective for the July 2020 reporting cycle. The mortgagee letter includes the SDFMS Default Reason code and Default Status code requirements for each of the loss mitigation options.


The new options include:

  • COVID-19 Owner-Occupant Loan Modification
  • COVID-19 Combination Partial Claim and Loan Modification
  • COVID-19 FHA-HAMP Combination Loan Modification and Partial Claim with reduced documentation
  • COVID-19 Non-Occupant Loan Modification
  • COVID-19 Pre-Foreclosure sale (PFS)
  • COVID-19 Deed-in-Lieu (DIL) of Foreclosure


Mortgagees must review the borrower for these options at the end of the COVID-19 Forbearance period. Borrowers who were current or less than 30 days past due as of March 1, 2020 are eligible for these options. All of the loss mitigation options are non-incentivized with the Partial Claim amounts being reimbursed by HUD through the claim submission process. The PFS and DIL claims are submitted using the standard process excluding the mortgagee incentive.

Don’t hesitate to contact us at to discuss how CRFS can help your servicing organization manage these claims, as the projected volumes across the industry are expected to be significant.