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FHFA Won’t Require Lump-Sum Payment After Forbearance

FHFA Won’t Require Lump-Sum Payment After Forbearance

The Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae
and Freddie Mac, said Monday that it will not require homeowners who take mortgage
forbearance due to financial hardship from the COVID-19 pandemic to make up the
missed payments in a lump sum.

The FHFA made the announcement after news stories cautioned that homeowners who
take forbearance would be on the hook to repay missed payments in a lump sum as
soon as their forbearance period ends. Recent stimulus legislation had not clarified the
repayment process. Borrowers with Fannie- and Freddie-backed loans who take
forbearance will be contacted by their mortgage servicer before the end of their
forbearance period to work out repayment options, which may include modifying the
loan so the borrower’s payments are added to the end of the mortgage.

So far, more than 3.4 million homeowners—or 6.4% of all U.S. mortgage loans—are
now in forbearance, according to data firm Black Knight Financial. In some cases,
mortgage servicers have offered forbearance periods of up to a year. “During this
national health emergency, no one should be worried about losing their home,” FHFA
Director Mark Calabria said in a statement. “While today’s statement only covers Fannie
Mae and Freddie Mac, I encourage all mortgage lenders to adopt a similar approach.”

Source: Federal Housing Finance Agency and “Fannie-Freddie Won’t Require Lump-Sum
Forbearance Repayments,” Bloomberg (April 27, 2020)

Source: https://magazine.realtor/daily-news/2020/04/27/fhfa-won-t-require-lump-sum-payment-after-forbearance

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