WASHINGTON — The Federal Housing Administration issued a mortgagee letter last week reminding lenders that it can hit them with treble damages if they don't try to work with distressed borrowers.
"There is really nothing new here. We already had both incentives and treble damage penalties in place. But, given the increase in defaults and foreclosures, FHA thought it was important to remind servicers of the requirement for effective loss mitigation and the consequences of failing to provide borrowers with this support," said FHA spokesman Lemar Wooley.
"Our average conveyance claim is $110,000. That means if a servicer fails to offer loss mitigation to a customer, it could be liable for a $330,000 penalty," he explained.
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