Borrowers in Forbearance Can Still Get a Mortgage, Probably…
Homeowners who have been granted forbearance from
making full payments on their GSE guaranteed loans during the COVID-19 crisis
may still be able to refinance or buy a new home when the crisis ends.
The Federal Housing Finance Agency (FHFA) has announced
that Fannie Mae and Freddie Mac will permit borrower to obtain a new mortgage
under the following conditions. 1) They have reinstated their mortgage or have
continued to make their mortgage payments despite being in forbearance or 2) where
forbearance has ended, eligibility will be dependent on making three
consecutive payments under a repayment plan, a loan modification, or the
recently announced payment deferral option.
“Homeowners who are in COVID-19 forbearance but continue to make their
mortgage payment will not be penalized,” said Director Mark Calabria.
“Today’s action allows homeowners to access record low mortgage rates and
keeps the mortgage market functioning as efficiently as possible.”
It’s not entirely clear if the two conditions above are BOTH required or if it’s an “either/or” situation. FHFA’s press release may offer clarity in the following section, but it’s still potentially open to interpretation:
“Borrowers are eligible to refinance or buy a new home if they are current on their mortgage (i.e. in forbearance but continued to make their mortgage payments or reinstated their mortgage). Borrowers are eligible to refinance or buy a new home three months after their forbearance ends and they have made three consecutive payments under their repayment plan, or payment deferral option or loan modification.”
In any event, we expect there will be some additional clarification offered shortly.
FHFA is also extending the ability of the GSEs to purchase single-family
mortgages that are in forbearance to those with note dates on or before June
30, 2020. The previous deadline was May 31. These loans must be delivered to
the GSEs by August 31, 2020 and the borrower may not have missed more than one