Agency orders Fannie Mae and Freddie Mac to extend payment deferral policies to all borrowers with eligible hardships
The Federal Housing Finance Agency (FHFA) has announced allowing borrowers facing financial hardship to defer up to six months of mortgage payments.
The FHFA has mandated mortgage providers Fannie Mae and Freddie Mac to enhance their payment deferral policies as part of its efforts to promote sustainable homeownership and support the safety and soundness of the government-sponsored enterprises.
"The enterprises completed more than one million COVID-19 payment deferrals during the pandemic, helping borrowers nationwide to stay in their homes," said FHFA director Sandra 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."
The new foreclosure prevention option will be available for borrowers with COVID-19 hardships and other distressed homeowners with eligible financial struggles. In addition to the enhanced payment deferral, Fannie and Freddie will work with servicers to offer other solutions, including reinstatement, repayment plan, or loan modification, depending on their individual situations.
Mortgage Bankers Association CEO Bob Broeksmit commended FHFA for making payment deferrals a key part of Fannie Mae's and Freddie Mac's loss mitigation toolkit.
"The use of payment deferrals during the pandemic helped struggling borrowers stay in their homes," Broeksmit said. "MBA recommended in our recent white paper on the future of loss mitigation that FHFA and FHA resolve temporary hardships through payment deferrals and partial claims. 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."
The FHFA gave the firms a voluntary adoption date of July 1, 2023, and mandatory adoption by Oct. 1, 2023.
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