COVID-19: FHFA Reminds Lenders About Owner Forbearance
Homeowners unable to work during the pandemic may have trouble making their mortgage payments, but FHA, Fannie and Freddie have ways to offer them help.
Definition of Forbearance; Forbearance, in the context of a mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back.” When mortgage borrowers are unable to meet their repayment terms, lenders may opt to foreclose.
CHICAGO – Not everyone can work from home, and borrowers who find that they can’t make monthly mortgage payments due to COVID-19, also known as the coronavirus, have options to postpone payments, according to a statement released by the Federal Housing Finance Agency (FHFA).
FHFA Director Mark Calabria reminded mortgage servicers this week that they have forbearance options to offer homeowners as the virus continues its spread through the U.S.
“To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment,” Calabria said in a statement. “For borrowers that may be experiencing a hardship, I encourage you to reach out to your servicer.”
The Federal Housing Administration (FHA) also announced that mortgage payment assistance is available to those impacted by the virus.
“As with any other event that negatively impacts a borrower’s ability to pay their monthly mortgage payment, FHA’s suite of loss mitigation options provides solutions that mortgagees should offer to distressed borrowers – including those that could be impacted by the coronavirus – to help prevent them from going into foreclosure,” FHA said in a statement.
Forbearance options are available not only to those sick from the virus but also owners who may be facing a temporary hardship from it, such as a borrower who is quarantined and unable to work.
Source: National Association of Realtors® (NAR)
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