CRL also urges mortgages servicers to move swiftly in implementing the policy
WASHINGTON, D.C. – Financially struggling homeowners who have mortgages backed by Fannie Mae and Freddie Mac (the Enterprises) will receive help staying in their homes and affording their mortgages in the coming months. The Federal Housing Finance Agency (FHFA) announced yesterday that the Enterprises, which FHFA regulates, will strengthen their payment deferral policies by allowing borrowers facing financial hardship to defer up to six months of mortgage payments and repay the past-due amounts at the end of their loan.
“With this action, the FHFA will help more families who face temporary hardships stay in their homes, resolve their delinquencies, and resume making their monthly mortgage payments. FHFA Director Sandra Thompson deserves praise for building on the success of the agency’s COVID-19 policies by extending the payment deferral option to all borrowers with eligible financial hardships,” said Mitria Spotser, vice president and federal policy director at the Center for Responsible Lending (CRL). “We encourage mortgage servicers to move swiftly to implement this payment deferral option and to proactively reach out to borrowers who have fallen behind on their mortgages.”
Spotser continued, “In sharp contrast to the 2008 Financial Crisis, policymakers largely succeeded in preventing avoidable foreclosures during the COVID-19 crisis. A key lesson has been that avoiding foreclosures whenever possible benefits homeowners, communities, mortgage companies, and taxpayers.”
As stated in the FHFA press release: “Payment deferral allows borrowers who are able to resolve a financial hardship to keep the same monthly mortgage payment by moving past-due amounts to the end of the loan as a non-interest bearing balance, due and payable at maturity, sale, refinance, or payoff. During the pandemic, the Enterprises’ payment deferral policies were expanded to allow borrowers with COVID-19 hardships to utilize this solution. Given the success of the COVID-19 payment deferral, FHFA and the Enterprises are enhancing the standard payment deferral policies available to borrowers experiencing other eligible hardships.
Borrowers facing financial hardship should contact their servicer to discuss whether this is an appropriate solution for their unique circumstances. Servicers may offer borrowers one of several solutions to resolve a delinquency, including the enhanced payment deferral, reinstatement, repayment plan, or loan modification, depending on their individual situations….
The Enterprises will work with servicers to implement the enhanced payment deferral policies, with a voluntary adoption date of July 1, 2023, and mandatory adoption by October 1, 2023.”
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