Good News for Those in Forbearance
Yesterday the Federal Housing Financing Agency (FHFA) announced that Fannie Mae and Freddie Mac issued temporary guidance regarding the eligibility of those currently in forbearance, or those who have recently ended their forbearance, that are looking to refinance or purchase a home. The new guidance states that borrowers are eligible to refinance or purchase a home if they are current on their mortgage. This includes individuals that were approved for a forbearance by their lender, but continued to make their mortgage payments. For those borrowers that were approved for a mortgage forbearance and missed a payment, there is clarity as well. Per the announcement, once a borrower makes three consecutive months payments they will become eligible to refinance or purchase. This is good news for borrowers that want to take advantage of current mortgage rates which continue to be at historic lows.
“Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized,” said FHFA Director Mark A. Calabria. “(Tuesday’s) action allows homeowners to access record low mortgage rates and keeps the mortgage market functioning as efficiently as possible.”
This is important news since removing such a large pool of borrowers from being able to obtain financing could have had a negative impact on home values. Before the announcement, concerns were that borrowers that had needed forbearance help would be ineligible to refinance or purchase until 12 consecutive months of payments were made after exiting forbearance. The new guidance represents a significant reduction to that timeline.
In addition to the announcement yesterday on forbearance, the FHA announced that it would halt all new foreclosure actions and suspend all foreclosure actions currently in process, excluding legally vacant or abandoned properties. The FHFA also announced that foreclosure and eviction moratoriums backed by Fannie Mae and Freddie Mac were extended to June 30. Deadlines for that moratorium were set to expire on May 17.