May 20th, 2020 10:46 AM by Jackie A. Graves, President
The government agency that oversees mortgage giants Fannie Mae and
Freddie Mac took another step Tuesday to ensure that borrowers who lose jobs
because of the coronavirus crisis won’t suffer lasting financial scars.
The Federal Housing Finance Agency (FHFA) says borrowers who are in
forbearance, or have recently exited forbearance, will remain eligible to
refinance, or to get a loan to buy a home. The latest move applies to borrowers
who are in forbearance but are “current” on their loans, meaning they’ve
continued making payments.
That means that borrowers who applied for forbearance as a safety net
but continued paying their loans would suffer no loss of creditworthiness. For
borrowers who missed payments in forbearance, they will be eligible to
refinance or buy a new home three months after their forbearance ends and they
have made three consecutive payments, the FHFA says.
“Homeowners who are in COVID-19 forbearance but continue to make their
mortgage payment will not be penalized,” FHFA Director Mark Calabria said in a
statement. “Today’s action allows homeowners to access record-low mortgage rates
and keeps the mortgage market functioning as efficiently as possible.”
Forbearance plans allow borrowers to miss mortgage payments for up to a
year. The mortgage relief is part of the federal government’s massive response
to the economic crisis caused by the coronavirus. The initiative seeks to avoid
a repeat of the flood of foreclosures that shook the U.S. housing market during
the Great Recession.
More than 4.1 million mortgages are currently in forbearance,
representing 8.1 percent of all U.S. home loans, according to the Mortgage
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