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FHFA Announces New Mortgage Forbearance Guidelines

[Updated: Jun 03, 2020] Mar 25, 2020 by Marc Rapport
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Federal market makers continue broadening their efforts to support the nation's homeowners and renters during the coronavirus pandemic.

After suspending foreclosures and evictions for holders of single-family home mortgages last week, the Federal Housing Finance Agency (FHFA) announced this week that it will do the same for owners of multifamily properties.

That's on the condition that renters not be evicted for inability to pay rent caused by the financial impact of the spread of COVID-19.

"Renters should not have to worry about being evicted from their home, and property owners should not have to worry about losing their building, due to the coronavirus," said Mark Calabria, director of the FHFA, an independent federal regulator that is the umbrella agency for Fannie Mae, Freddie Mac, and the nation's 11 Federal Home Loan Banks (FHLBs).

In return, Fannie Mae says it will allow lenders to grant forbearance to borrowers in properties it financed for up to three months "if the borrower is experiencing hardship due to the impact of the COVID-19 national emergency." More than 27,000 properties nationwide are expected to be able to provide relief to renters as a result.

These Government Sponsored Enterprises (GSEs) purchase and guarantee billions of dollars in private mortgage loans every year and currently provide more than $6.3 million in total funding for U.S. mortgage markets and financial institutions.

Doubling down on regulatory relief

The regulator already had suspended foreclosures and evictions for GSE-backed single-family mortgages and loosened its rules for appraisals and employment verifications for potential buyers. Mortgage forbearance also is offered for single-family homeowners who need to delay mortgage payments.

All the new rules are in place for 60 days or more, and more could be coming. "FHFA and the (GSEs) are monitoring the coronavirus national emergency's effect on the housing market and will continue to update our policies when necessary," the agency said.

The Federal Housing Administration (FHA) last week (March 18) also announced a 60-day moratorium on foreclosures and evictions for holders of FHA-insured mortgages on single-family homes.

"This is an uncertain time for many Americans, particularly those who could experience a loss of income. As such, we want to provide FHA borrower households with some immediate relief given the current circumstances," said Federal Housing Commissioner Brian Montgomery. The FHA is part of the Department of Housing and Urban Development (HUD).

"Our actions today make it clear where the priority needs to be," Montgomery said. The FHA also noted that it has short- and long-term forbearance options, mortgage modifications, and other mortgage payment relief options available based on the borrower's individual circumstances.

Work with individual lenders

Both the FHA and FHFA also urged that anyone struggling with mortgage payments because of COVID-19 fallout should work with their individual lenders.

"To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment. For borrowers that may be experiencing a hardship, I encourage you to reach out to your servicer," Calabria said.

He went on to say that the GSEs and FHLBs will continue to support the secondary mortgage market and that the Uniform Backed Mortgage Securities (UMBS) market continues to operate at its normal level.

Also Monday, the Federal Reserve pledged "unlimited quantitative easing" that includes buying unlimited amounts of mortgage-backed securities, U.S. Treasuries, and other assets to help settle markets and keep the economy from collapsing.

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