HUD Mortgagee Letter 2023-06 — Establishment of the 40-Year Loan Modification Loss Mitigation Option

hud-ml-2023-06

HUD ML 2023-06 updates Handbook 4000.1 section III.A.2.o.iii(C)(2) to establish a standalone 40-year (480-month) Loan Modification for FHA's COVID-19 Recovery Modification when Partial Claim funds are not available.

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source:
  type: regulation
  id: hud-ml-2023-06
  authority: HUD Mortgagee Letter 2023-06 — Establishment of the 40-Year Loan Modification Loss Mitigation Option
  description: |
    HUD ML 2023-06 updates Handbook 4000.1 section III.A.2.o.iii(C)(2) to
    establish a standalone 40-year (480-month) Loan Modification for FHA's
    COVID-19 Recovery Modification when Partial Claim funds are not available.
obligations:
  - id: hud-ml-2023-06-implementation-deadline
    canonical_id: hud-ml-2023-06-implementation-deadline
    section: HUD ML 2023-06 — Effective Date
    description: |
      [LENDER] may implement the standalone-40-year COVID-19 Recovery
      Modification provisions of HUD ML 2023-06 immediately but must implement
      them no later than May 8, 2023.
    type: do
    audit_question: Can [LENDER] demonstrate that the ML 2023-06 standalone 40-year COVID-19 Recovery Modification was implemented in its loss-mitigation operations no later than May 8, 2023?
    program_review: Does the program account for the implementation deadline — adopting the standalone 40-year COVID-19 Recovery Modification no later than May 8, 2023?
    file_review: Review the loss-mit procedure version history; confirm the standalone 40-year Recovery Modification was operational by May 8, 2023.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: continuous
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - servicing
      - loss-mitigation
      - covid-19-recovery
      - loan-modification
      - effective-date
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2023-06 — Effective Date
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-06hsgml.pdf
      snapshot_id: 08ce648d1d15a416
      fetched_at: '2026-05-22T19:56:40Z'
      content_hash: sha256:4e2aebd21e0aa2f2dc6dca311ac2f29bb5229a7553903ba4acb568e3acebffc0
      paragraph_quote: |-
        The provisions of this ML may be implemented immediately but must be 
        implemented no later than May 8, 2023.
      drafter_attestation: |
        Copied verbatim from snapshot 08ce648d1d15a416 (content.txt) at
        2026-05-22T20:00Z. Substring is the Effective Date trigger of
        ML 2023-06.
    promoted_at: '2026-05-22T20:56:14+00:00'
    promoted_from: hud-ml-2023-06-roundb-v1.yaml
  - id: hud-ml-2023-06-recovery-modification-definition
    canonical_id: hud-ml-2023-06-recovery-modification-definition
    section: HUD ML 2023-06 — COVID-19 Recovery Modification Definition (III.A.2.o.iii(C)(2)(a))
    description: |
      Under HUD ML 2023-06, the COVID-19 Recovery Modification that [LENDER]
      offers is a 360-month or 480-month Loan Modification, which must include a
      COVID-19 Recovery Partial Claim if Partial Claim funds are available. The
      Target Payment achieves a minimum 25 percent reduction to the P&I portion
      of the Borrower's monthly Mortgage Payment.
    type: do
    audit_question: For every COVID-19 Recovery Modification executed on or after May 8, 2023, can [LENDER] evidence that the modification was either a 360-month or 480-month Loan Modification, included a COVID-19 Recovery Partial Claim where Partial Claim funds were available, and targeted at least a 25 percent reduction in the P&I portion of the Borrower's monthly Mortgage Payment?
    program_review: Does the program account for the Recovery Modification structure — a 360- or 480-month Loan Modification including a Recovery Partial Claim where funds are available, targeting at least a 25% reduction in the P&I portion of the monthly payment?
    file_review: Spot-check Recovery Modifications executed on/after May 8, 2023; confirm 360/480-month term, a Partial Claim where funds were available, and a >=25% P&I reduction target.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: per-loss-mitigation-evaluation
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - servicing
      - loss-mitigation
      - covid-19-recovery
      - loan-modification
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2023-06 — III.A.2.o.iii(C)(2)(a)
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-06hsgml.pdf
      snapshot_id: 08ce648d1d15a416
      fetched_at: '2026-05-22T19:56:40Z'
      content_hash: sha256:4e2aebd21e0aa2f2dc6dca311ac2f29bb5229a7553903ba4acb568e3acebffc0
      paragraph_quote: |-
        The COVID-19 Recovery Modification is a 360-month or 480-
        month Loan Modification, which must include a COVID-19 
        Recovery Partial Claim if Partial Claim funds are available.
      drafter_attestation: |
        Copied verbatim from snapshot 08ce648d1d15a416 (content.txt) at
        2026-05-22T20:00Z. Substring is the COVID-19 Recovery Modification
        definition (standalone 40-year option) incorporated into Handbook
        4000.1 III.A.2.o.iii(C)(2)(a) by ML 2023-06.
    promoted_at: '2026-05-22T20:56:14+00:00'
    promoted_from: hud-ml-2023-06-roundb-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-22T20:56:14+00:00'
    candidate_path: obligations\_remediation\_round_b_drafts\hud-ml-2023-06-roundb-v1.yaml
    candidates_promoted: 2
    candidates_skipped_existing: 0

Verbatim regulatory text (2)

Verbatim provisions from HUD Mortgagee Letter 2023-06 — Establishment of the 40-Year Loan Modification Loss Mitigation Option — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

HUD ML 2023-06 — Effective Date

The provisions of this ML may be implemented immediately but must be implemented no later than May 8, 2023.

Source: HUD ML 2023-06 — Effective Date · source URL · snapshot 08ce648d1d15a416

HUD ML 2023-06 — COVID-19 Recovery Modification Definition (III.A.2.o.iii(C)(2)(a))

The COVID-19 Recovery Modification is a 360-month or 480- month Loan Modification, which must include a COVID-19 Recovery Partial Claim if Partial Claim funds are available.

Source: HUD ML 2023-06 — III.A.2.o.iii(C)(2)(a) · source URL · snapshot 08ce648d1d15a416