Lawmakers push for year-long forbearance on GSE mortgages
A group of 27 lawmakers in the House of Representatives sent a letter to President Obama this week, asking his administration to extend a forbearance period to 12 months for unemployed borrowers with mortgages owned by Fannie Mae and Freddie Mac. Under the current programs at the government-sponsored enterprises, qualified homeowners can receive a forbearance period of usually between 90 and 180 days as part of a modification agreement. On July 7, the Federal Housing Administration and the Treasury Department required mortgage servicers to provide a 12-month forbearance to unemployed borrowers of government-insured loans. The minimum forbearance period was also extended to a full year on mortgages moving through the Home Affordable Modification Program. Fannie and Freddie mortgages are not included in the Treasury requirements. "We believe an extended forbearance option should be expanded to other agencies across the government," the lawmakers wrote. "FHA-insured loans comprise of 14% of the housing market, while Fannie Mae and Freddie Mac own or guarantee approximately half of existing mortgages." While private payrolls increased by 114,000 in July, the current unemployment remains elevated at 9.2%. Currently, the Federal Housing Finance Agency, the GSE regulator, approves the forbearance and other loss mitigation efforts. It has long kept Fannie and Freddie from participating in wide-scale principal reduction programs, keeping results low for similar government initiatives. The lawmakers, all Democrats and include Rep. Elijah Cummings (D-Md.) and Barney Frank (D-Mass.) said the administration should effort to convince the FHFA oversight board of implementing the extended assistance. "By expanding the forbearance period for additional homeowners and their families, we can maximize opportunities for those who have suffered job losses to save their homes while they seek employment," the lawmakers wrote. Write to Jon Prior. Follow him on Twitter @JonAPrior.