In a welcome move that will help settle a key concern that arose as an unintended consequence related to the CARES Act, the FHFA today announced a new policy for borrowers who were admitted into the forbearance program for a Fannie Mae or Freddie Mac loan, but did not actually forbear any payments.
In a well-received announcement today, just hours before the appearance of the FHFA Director on a nationwide Mortgage Bankers Association webinar, the FHFA rolled out the following press release: FHFA Announces Refinance and Home Purchase Eligibility for Borrowers in Forbearance.
The key text in the announcement states: “Borrowers are eligible to refinance or buy a new home if they are current on their mortgage (I.e. in forbearance but continued to make their mortgage payments or reinstated their mortgage).”
This announcement comes on the heels of several media stories highlighting this as an issue and some effective dialogue between the regulator and key trade groups in Washington.
Clearly dealing with a rash of unexpected implications from the forbearance program language, the FHFA has worked to minimize some of the challenges including: curtailing the number of months of advances that servicers will need to make when a loan goes into forbearance; fees and limits and defining what loans can be delivered for first payment forbearances that are as yet unsold; and options for repaying the balance due once the period is over.
All of these issues were thrust upon the government lending programs and their regulators, as congress and the Administration rushed to pass the sweeping legislation on the CARES Act in order to cushion the blow of the impact of the virus on the economy and the nation’s citizens.
For the nations mortgage finance industry, this is a positive step taken today.
– David Stevens
David H. Stevens, CMB, is a Mortgage Media Advisor, and former SVP of Single Family at Freddie Mac, former EVP at Wells Fargo Home Mortgage, former President and COO of the Long and Foster Realty Companies, former Assistant Secretary of Housing and FHA Commissioner, former CEO of the Mortgage Bankers Association.