WASHINGTON, D.C. – Borrowers in forbearance with a mortgage backed by Fannie Mae or Freddie Mac (the Enterprises) are not required to repay the missed payments in one lump sum, the Federal Housing Finance Agency (FHFA) announced recently.
“No lump sum is required at the end of a borrower’s forbearance plan for Enterprise-backed mortgages,” FHFA Director Mark Calabria said.
To help homeowners navigate the forbearance process, FHFA partnered with the Consumer Financial Protection Bureau on the Borrower Protection Program to provide homeowners accurate information about forbearance and address concerns noted in some consumer complaints, Calabria said. “While today’s statement covers only Fannie Mae and Freddie Mac mortgages, I encourage all mortgage lenders to adopt a similar approach.”
In response to the COVID-19 national emergency, the Enterprises authorized a forbearance option, which is a pause or reduction in monthly mortgage payments, for borrowers with a financial hardship due to the pandemic.
The missed payments will have to be paid back by the borrower. For those borrowers who opt for forbearance, their mortgage servicer will contact them about 30 days prior to the end of the forbearance plan to see if the temporary hardship has been resolved and to discuss a variety of repayment options.
If the hardship has not been resolved, the forbearance plan can be extended. If the hardship has been resolved, the servicer will work with the borrower to:
• Set up a repayment plan;
• Modify the loan so the borrower’s payments are added to the end of the mortgage; or
• Set up a modification that reduces the borrower’s monthly mortgage payment.