Key Highlights
- Fannie Mae and Freddie Mac announced that homeowners may be able to delay mortgage payments for up to 12 months.
- Two options here: homeowners may qualify for reduced payments or an altogether pause in payments
Very good news for homeowners who experienced a loss of or reduction in income due to the coronavirus! Homeowners may qualify for either mortgage payment deferral for up to one year or reduced payments. Adding to this good news is that borrowers will not have to deal with penalties or late fees PLUS delayed payments will NOT be reported to credit agencies.
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Malloy Evens, senior vice president and single-family chief credit officer for Fannie Mae, said, “Our thoughts are with everyone who may be impacted by COVID-19…and (we want you to know that) Fannie Mae, along with our lending and servicing partners, is committed to ensuring assistance is available to homeowners in need. We encourage residents whose employment or income are impacted…to seek available assistance as soon as possible.”
Things to know about applying for mortgage relief assistance:
- Borrowers are responsible for contacting their loan services themselves.
- Borrowers ONLY need to testify over the phone that they are experiencing financial hardship due to the pandemic.
- Payment relief is available for ANY type of property be the property a primary residence, second home or investment property.
Throughout the length of the loan forbearance period, both Fannie Mae and Freddie Mac may reevaluate the borrower’s repayment ability and whether or not the loan is still necessary. Once the loan period expires, the loan servicer will develop a doable, realistic repayment plan with the borrower and/or extend the life of the loan.
Some lending institutions are offering forbearance periods that have shorter loan lives than 12 months. It is crucial for borrowers to research and discover the length of those lone life times. 90-day forbearance period? 120-day forbearance period? It’s up to borrowers to ask.
Chris Mayer, a real estate economist with Columbia University’s business school, said, “We don’t want people who have been responsible in making their mortgage payments to suddenly be declared delinquent and to lose their access to credit….let’s hold people harmless for something that they didn’t control.”
Thanks to Inman’s Lillian Dickerson.
Also read: Rent Relief to Offset COVID-19 Losses?, US Housing Market Missing 3.3M Houses, Help Your Clients Become Real Estate Literate with These Financial Terms
