Democratic Presidential candidate Joe Biden said during an interview Wednesday that there should be mortgage and rent forgiveness—across the board—during the COVID-19 pandemic, according to multiple reports.
“There should be rent forgiveness and there should be mortgage forgiveness now in the middle of this crisis. Forgiveness. Not paid later, forgiveness,” he said, according to a Vanity Fair transcript of an interview the former Vice President gave on Good Luck America, Snapchat’s daily political show. “It’s critically important to people who are in the lower-income strata.”
During the interview, Biden said nobody should be paying more than 30% of their income for rent.
An article by Forbes said other Democrats, including Rep. Alexandria Ocasio-Cortez (D-NY), have backed similar initiatives, including one sponsored by Rep. Ilham Omar (D-Minnesota), which would cancel all rent and mortgage payment for the duration of the pandemic.
According to The Hill, the measure proposed by Ocasio-Cortez and Omar would set up federal relief funds for landlords and lenders to recoup the cost of the lost mortgage and rent payment if they agree to abide by a set of renter protections for five years.
Black Knight reported that as of May 7, nearly 4.1 million homeowners are in forbearance plans, which represents 7.7% of all active mortgages.
According to Black Knight CEO Anthony Jabbour, the recent Federal Housing Finance Agency (FHFA) announcement of a four-month limit on advance obligations for servicers of mortgages backed by Fannie Mae and Freddie Mac provides the industry with some much-needed clarity.
“Having a four-month end date on the period in which servicers need to advance principal and interest payments on behalf of homeowners in forbearance is extremely helpful to our servicing clients,” said Jabbour. “Still, even knowing that time limit, with today’s number of forbearance plans, servicers are still looking at more than $7 billion dollars in advances over those four months. And the forbearance numbers are climbing steadily, day by day. Clearly, this remains a challenging situation all around.”
The FHFA announced Wednesday that Fannie Mae and Freddie are making new payment deferral options available for borrowers in COVID-19-related forbearance plans.
The plan allows homeowners, who are able to return to making their normal monthly mortgage payments, the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity.
“For homeowners in forbearance due to COVID-19, payment deferral allows them to make up missed forbearance payments when they sell their home or refinance,” said FHFA Director Dr. Mark A. Calabria. “This new forbearance repayment solution responsibly simplifies options for homeowners while providing an additional tool for mortgage servicers. Borrowers who can pay their mortgage should because missed payments remain an obligation that will ultimately have to be repaid.”