Now more than ever the mortgage market needs a basis for making well informed high quality decisions. An important component of any transaction is the value of the underlying collateral. A confidence in that value within a complicated landscape. Please find information regarding the recent FHFA policy below. Will this modification prove to support a measure of stability? Allow our legendary quality products and high level customer service assist you in navigating the current challenging market conditions.
The Federal Housing Finance Agency (FHFA) announced the policies for Fannie Mae and Freddie Mac’s servicer obligations to advance scheduled monthly principal and interest payments for single-family mortgages.
The policy states once a servicer has advanced four months of missed payments on a loan, it will have no further obligation to advance scheduled payments. This policy applies to all GSE servicers.
“The four-month servicer advance obligation limit for loans in forbearance provides stability and clarity to the $5 trillion Enterprise-backed housing finance market," said FHFA Director Dr. Mark A. Calabria. “Mortgage servicers can now plan for exactly how long they will need to advance principal and interest payments on loans for which borrowers have not made their monthly payment."
The FHFA is also instructing the GSEs to maintain loans in COVID-19 forbearance plans in MBS pools for at least the duration of the forbearance plan.
Mortgages that are delinquent for more than four months, historically, were purchased out of MBS pools by the GSEs. Loans with COVID-19 payment forbearance shall be treated “like a natural disaster event” and will remain in the MBS pool.
The FHFA says this change reduces the potential liquidity demands on the GSEs from loans in forbearance and delinquent loans. A recent report states that as of April 16, more than 2.9 million homeowners, or 5.5% of all mortgages, have entered into COVID-19 mortgage forbearance plans. This population represents $651 billion in unpaid principal and includes 4.9% of all GSE-backed loans and 7.6% of FHA/VA loans.
A new survey by the Mortgage Bankers Association (MBA) found that the number of home loans in forbearance rose from 2.73% to 3.74% during the week of March 30 to April 5. Mortgages backed by Ginnie Mae had the largest weekly growth of 1.58% and the highest overall share in forbearance requests (5.89%).
Ron Ahlensdorf Jr.