FHFA Clarifies: No Lump-Sum Repayments for Borrowers in Forbearance

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The Federal Housing Finance Agency (FHFA) has alerted Fannie Mae, Freddie Mac and the GSEs’ mortgage servicers that borrowers who have received forbearance in the face of COVID-19 will not be required to repay missed payments in one lump sum.

“During this national health emergency, no one should be worried about losing their home,” says FHFA Director Mark Calabria. “No lump sum is required at the end of a borrower’s forbearance plan for enterprise-backed mortgages.”

For borrowers who opt for forbearance, their mortgage servicers will contact them about 30 days before the end of the forbearance plan to see if the temporary hardship has been resolved and discuss a variety of repayment options.

If the hardship has not been resolved, the forbearance plan can be extended. If the hardship has been resolved, the servicer will work with the borrower to set up a repayment plan, modify the loan so the borrower’s payments are added to the end of the mortgage or set up a modification that reduces the borrower’s monthly mortgage payment.  

“Simply put, if you are a homeowner seeking forbearance and Freddie Mac owns your loan, you are never required to make up missed payments in a lump sum,” says Freddie Mac CEO David Brickman. “Our policies offer a number of options to bring borrowers current, including repayment plans, resuming normal payments or lowering your monthly payment through a modification.”

Freddie Mac borrowers facing a hardship are entitled to up to 12 months of forbearance. Servicers will start with a shorter plan and reassess to see if an extension for up to 12 months is necessary.

Fannie Mae has also made it clear that lump-sum payments are not required.

“We do not require a homeowner to repay missed payments all at once at the end of the forbearance plan, unless they choose to do so,” says Hugh R. Frater, CEO of Fannie Mae. “We encourage everyone to get the facts – call your mortgage servicer, or go to Fannie Mae’s KnowYourOptions.com website, which provides a one-stop overview of the various options available to homeowners and renters who might need help due to COVID-19.”

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