The Federal Housing Finance Agency announced on Thursday that Fannie Mae and Freddie Mac will continue to buy qualified loans in forbearance, extending the temporary policy until Dec. 31, 2020 in order to continue its support of homeowners and mortgage lenders.
Originally announced in April, the enterprises issued the temporary policy to allow certain single-family mortgages in forbearance to be delivered to the GSEs.
The initial temporary policy was set to expire May 31, 2020. However, the FHFA has made several subsequent extensions as it monitors the impact of the coronavirus.
“Eligible loans will continue to be priced to mitigate the heightened risk of loss to the Enterprises from said loans. These prudential measures also ensure fulfillment of the Enterprises’ charter requirements to only purchase loans that meet the purchase standards imposed by private, institutional mortgage investors,” the FHFA said in its release.
One week prior to FHFA’s initial temporary policy announcement, the agency teamed up with the Consumer Financial Protection Bureau to launch the Borrower Protection Program – an initiative that allows the two to share servicing information in an effort to protect borrowers.
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Under the program, the CFPB provides complaint information and analytical tools to FHFA via a secure electronic interface. In turn, the FHFA provides the bureau information about forbearances, modifications and other loss mitigation initiatives undertaken by the enterprises.
Along with the most recent extension, the FHFA said it will continue sharing aggregated data with the CFPB on loans that enter forbearance before delivery to the enterprises. According to the release, 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.”
Mortgage Bankers Association’s most recent forbearance report revealed the GSEs rate of forbearance is down to 3.72% – the 20th consecutive week the enterprises’ rate has fallen. However, 3 million American homeowners are still in forbearance plans with an approximate 25.02% in the initial stage and 73.14% in some form of extension.
In a continued bid for stability on Aug. 27, the FHFA also extended its moratorium on foreclosures and evictions for borrowers with mortgages backed by Fannie Mae and Freddie Mac until Dec. 31.