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FHFA announces extension of GSE loan forbearance policy
The Federal Housing Finance Agency (FHFA) Friday announced an extension of the temporary policy allowing the government-sponsored enterprises (GSEs) to purchase certain single-family mortgage loans in forbearance. The policy, originally set to expire last Friday, has been extended for loans originated through August 31, 2020.
Earlier this year, the FHFA and CFPB announced a Borrower Protection Program to ensure borrowers are protected during the coronavirus pandemic and to facilitate information sharing between the organizations. The FHFA will be sharing aggregated data on loans that enter forbearance with the CFPB before delivering the loan to the GSEs.
In addition, the data sharing will allow the FHFA to fulfill its obligation under the qualified mortgage (QM) Patch to ensure that loans sold to the GSEs are compliant with the intent of the Dodd-Frank Act’s ability to repay provisions.
“Extending the Enterprises’ ability to purchase these previously ineligible loans will help provide liquidity to mortgage markets. That said, to make homeownership sustainable, lenders have a responsibility to ensure that borrowers can make their monthly mortgage payment,” said FHFA Director Mark Calabria in the announcement.
The FHFA announced in April its temporary policy to allow for the purchase of single-family mortgages in forbearance which aimed to provide liquidity in mortgage markets and allow originators to keep lending.
NAFCU is working closely with the FHFA to address credit union mortgage servicer concerns and had previously urged the agency to provide relief to servicers that, without action by the FHFA, would have to continue making principal and interest payments to the GSEs on loans in forbearance. The FHFA announced in April that it will provide a four-month limit on advances of principal and interest payments for these loans.
NAFCU will continue to monitor the FHFA's efforts to support liquidity in the mortgage market and work with the agency to ensure credit unions' concerns are addressed.
In addition, the association is currently seeking comment from member credit unions on the CFPB's notice of proposed rulemaking (NPRM) issued earlier this month regarding the definition of a general qualified mortgage (QM) under the Truth in Lending Act (TILA). The NPRM seeks to amend the QM definition in Regulation Z to replace the debt to income (DTI) limit by removing the current 43 percent threshold and replacing it with a price-based threshold.
The CFPB has also extended the GSE QM Patch's sunset date until the amendments to the general QM loan definition take effect. NAFCU sent members two Regulatory Alerts to inform them of how the potential changes and the extension would impact credit unions.