No Lump Sum Repayment Required For GSE Loans In Forbearance

April 27, 2020

The Federal Housing Finance Agency is doubling down on its message that borrowers in forbearance have other repayment options and are not required to repay their loans in forbearance in one lump sum payment, for Freddie Mac and Fannie Mae-backed mortgages. This is yet another notice as Freddie Mac’s March announcement highlighted that full repayment was merely one of a few options that borrowers have, not the only one.
“During this national health emergency, no one should be worried about losing their home,” said FHFA Director Mark Calabria. “No lump sum is required at the end of a borrower’s forbearance plan for Enterprise-backed mortgages. To help homeowners navigate the forbearance process, FHFA partnered with CFPB on the Borrower Protection Program to provide homeowners accurate information about forbearance and address concerns noted in some consumer complaints. While today’s statement only covers Fannie Mae and Freddie Mac mortgages, I encourage all mortgage lenders to adopt a similar approach.”
In the repayment process, a borrower will choose to either have their monthly payment reduced or paused. The mortgage servicer will then contact the borrower 30 days before the end of the forbearance period to check the status of the hardship the borrower is facing. If the hardship has been resolved, the servicer will work with the borrower to either set up a repayment plan, modify the loan so that the borrowers payments are added to the end of the mortgage or set up a modification that reduces the borrower’s monthly mortgage payment.
“Simply put, if you are a homeowner seeking forbearance and Freddie Mac owns your loan, you are never required to make up missed payments in a lump sum,” said Freddie Mac CEO David Brickman. “Our policies offer a number of options to bring borrowers current, including repayment plans, resuming normal payments or lowering your monthly payment through a modification. We encourage homeowners facing hardship to work with their servicer to identify the plan that’s appropriate for their unique situation.”
Hugh R. Frater, Chief Executive Officer of Fannie Mae, echoed those sentiments.
“We want every homeowner who is struggling because of this pandemic to know they have mortgage options,” said Frater. “We do not require a homeowner to repay missed payments all at once at the end of the forbearance plan, unless they choose to do so. We encourage everyone to get the facts–call your mortgage servicer, or go to Fannie Mae’s Web site, which provides a one-stop overview of the various options available to homeowners and renters who might need help due to COVID-19.”