Having trouble paying your mortgage during the coronavirus-induced economic meltdown? Take heart – help is on the way.
In a move to buttress the nation’s stressed home-lending machinery, the federal mortgage giants Fannie Mae and Freddie Mac will now be allowed to purchase loans in forbearance, Market Watch reports. Nearly 6% of all mortgages nationwide – representing some 3 million homeowners – are in forbearance agreements, which allow them to skip or make reduced monthly payments, according to the Mortgage Bankers Association.
“We are focused on keeping the mortgage market working for current and future homeowners during these challenging times,” says Mark Calabria, director of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, two institutions that buy mortgages from primary lenders. “Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending.”
In normal times, delinquent mortgages and loans in forbearance are ineligible for purchase by the two government-sponsored mortgage giants. The move to change the policy was made because some borrowers have sought forbearance shortly after closing, before the lender had the opportunity to sell the loans, the FHFA said.
The move aims to bring “stability and clarity” to the $5-trillion housing finance market backed by Fannie and Freddie, Calabria says, adding that “mortgage servicers can now plan for exactly how long they will need to advance principal and interest payments on loans for which borrowers have not made their monthly payment.”
The CARES Act stimulus package guaranteed that all homeowners with federally-backed mortgages could receive forbearance for up to one year – if they are struggling to meet mortgage payments due to loss of income as a result of the coronavirus pandemic. Forbearance inquiries are expected to rise again as unemployment continues to soar and May payment-due dates grow near.
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.