The Federal Housing Finance Agency (FHFA) says Fannie Mae and Freddie Mac will enhance their payment deferral policies to allow borrowers facing financial hardship to defer up to six months’ of mortgage payments.
During the pandemic, the GSEs’ payment deferral policies were expanded to allow borrowers with COVID-19 hardships to utilize this solution. Given the success of the COVID-19 payment deferral, FHFA and the enterprises are enhancing the standard payment deferral policies available to borrowers experiencing other eligible hardships.
“The enterprises completed more than 1 million COVID-19 payment deferrals during the pandemic, helping borrowers nationwide to stay in their homes,” says FHFA Director Sandra L. Thompson. “Based on the success of the COVID-19 payment deferral, we are making this solution a key part of our standard loss mitigation toolkit that is available to all borrowers with eligible hardships.”
Payment deferral will allow borrowers who are able to resolve a financial hardship to keep the same monthly mortgage payment by moving past-due amounts to the end of the loan as a non-interest-bearing balance, due and payable at maturity, sale, refinance or payoff.
The GSEs will work with servicers to implement the enhanced payment deferral policies, with a voluntary adoption date of July 1 and a mandatory adoption by October 1.
“Better alignment – regardless of the reason for hardship or who insures or guarantees the loan – will improve the consumer experience and lead to consistency and simplicity when addressing future adverse market conditions, national emergencies, and natural disasters,” comments MBA President and CEO Bob Broeksmit. “We will continue to work with FHFA on efficient, scalable home retention options for distressed borrowers while protecting taxpayers and ensuring secondary market certainty and liquidity.”