May 20, 2020

FHFA announces new guidance for borrowers in forbearance

HousesThe Federal Housing Finance Agency (FHFA) announced Tuesday that government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac have issued temporary guidance addressing the eligibility of borrowers who are in forbearance – or have recently ended their forbearance – to refinance or buy a new home. This guidance is the latest effort from the FHFA to support borrowers and mortgage servicers during the coronavirus pandemic.

“NAFCU appreciates FHFA Director Mark Calabria's continued support for mortgage servicers during the coronavirus pandemic by extending the eligibility date for the GSEs to purchase loans in forbearance,” said NAFCU President and CEO Dan Berger. “Ensuring the mortgage market remains liquid for homebuyers, including allowing borrowers to refinance their loans in forbearance if they are current on payments, is essential given the pandemic’s impact on our economy. The agency’s action is an important step toward promoting the health of the mortgage market during these uncertain economic times."

The guidance states borrowers are eligible to refinance or buy a new home if they are current on their mortgage, including those in forbearance who are continuing to make timely payments or those who have recently ended their forbearance. In addition, borrowers become eligible to refinance or buy a new home three months after their forbearance ends and they have made three consecutive payments under their repayment plan, payment deferral option or loan modification.

"Today's action allows homeowners to access record low mortgage rates and keeps the mortgage market functioning as efficiently as possible,” said Calabria of the new measures.

The FHFA has also extended the GSEs previously announced ability to purchase single-family mortgages in forbearance until Aug. 31. The policy, previously set to expire on May 31, allows the GSEs to purchase single-family mortgages in forbearance that meet specific eligibility criteria. 

The FHFA recently extended some of its relief efforts related to appraisals, its moratorium on foreclosures and evictions, verifying employment, providing documentation, and use of power of attorney and remote online notarizations.

NAFCU President and CEO Dan Berger recently spoke with FHFA Director Mark Calabria about the agency's efforts, as well as the impact significant forbearance requests could have on credit unions and other mortgage servicers.

The association 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.