Fannie Mae and Freddie Mac’s regulator said Monday that borrowers benefiting from programs that let them skip mortgage payments due to the coronavirus pandemic won’t have to make lump-sum repayments when the crisis passes.
The Federal Housing Finance Agency’s announcement is meant to “combat ongoing misinformation” about the forbearance plans homeowners are entitled to seek under the $2 trillion economic stimulus package enacted last month, FHFA Director Mark Calabria said.
“During this national health emergency, no one should be worried about losing their home,” Calabria said in a press release. “While today’s statement only covers Fannie Mae and Freddie Mac mortgages, I encourage all mortgage lenders to adopt a similar approach.”
There has been growing confusion among borrowers and lenders about how consumers would make up for the payments missed during the forbearances, which could last for as long as a year. The stimulus legislation didn’t outline what happens when the forbearance period ends, prompting some lenders to tell borrowers they might have to make lump-sum payments or meet other onerous terms.
The Federal Housing Administration, part of the Department of Housing and Urban Development, as well as the FHFA, have since issued guidance to lenders about what terms they should be offering. Still, many companies that service mortgages have been unsure about what the repayment terms should be, and in some cases they have been dissuading consumers from taking advantage of the program.
