Homeowners in COVID-19 related forbearance plans can optionally have their missed mortgage payments tacked on to the end of their loans, the Federal Housing Finance Agency (FHFA), regulator of government-sponsored enterprises Fannie Mae and Freddie Mac, has announced.
This new payment deferral option allows borrowers, who are able to return to making their normal monthly mortgage payment, the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity.
“For homeowners in forbearance due to COVID-19, payment deferral allows them to make up missed forbearance payments when they sell their home or refinance,” says Mark Calabria, director of the FHFA, in a statement. “This new forbearance repayment solution responsibly simplifies options for homeowners while providing an additional tool for mortgage servicers. Borrowers who can pay their mortgage should, because missed payments remain an obligation that will ultimately have to be repaid.”
Recently, the FHFA announced that borrowers with Fannie and Freddie-backed loans will not be required to make lump sum payments at the end of a forbearance period.
Fannie and Freddie servicers will begin offering the payment deferral repayment option starting July 1.
In addition to the new payment deferral option, borrowers with COVID-19 related hardships can still utilize other options that include reinstatement, repayment plan, or loan modifications based on their individual situations.