To support homeowners and mortgage lenders, the Federal Housing Finance Agency (FHFA) announced in a press release Thursday an extension of a temporary policy that allows for the purchase of some single-family mortgages in forbearance that meet eligibility criteria set by GSEs Fannie Mae and Freddie Mac. The policy will be extended for loans originated through December 31, 2020.
Earlier this year, FHFA and the Consumer Financial Protection Bureau (CFPB) announced the Borrower Protection Program "to ensure that borrowers are protected during the coronavirus national emergency and to facilitate related information sharing."
"To ensure that borrowers are qualifying for mortgages they can afford, FHFA will continue sharing aggregated data with the CFPB on loans that enter forbearance before delivery to the [GSEs]," FHFA said. "The data sharing will allow FHFA to fulfill its obligation under the so-called 'Qualified Mortgage Patch' to ensure that loans sold to the Enterprises are complying with the intent of Dodd-Frank's ability to repay provisions."
Due to the COVID-19 crisis, some borrowers requested forbearance shortly after closing but before the lender could deliver the loan to its respective GSE.
"Normally, mortgage loans in either forbearance or delinquency are ineligible for delivery under GSE requirements," the FHFA said. "In April, FHFA announced a temporary policy of allowing certain single-family mortgages in forbearance to be delivered. Today's extension continues this policy for loans originated through December 31, 2020. Eligible loans will continue to be priced to mitigate the heightened risk of loss to the [GSEs] from said loans. These prudential measures also ensure fulfillment of the [GSEs'] charter requirements to only purchase loans that meet the purchase standards imposed by private, institutional mortgage investors."
FHFA says it will continue to monitor the coronavirus' impact on renters, borrowers, and the mortgage market and update policies as needed.