FHFA announces further extension of COVID-related mortgage relief

The Federal Housing Finance Agency is providing an additional three months of forbearance to borrowers with loans backed by Fannie Mae and Freddie Mac, totaling 18 months of relief due to the coronavirus pandemic.

The FHFA said Thursday that it was aligning its policies with the Biden administration to address economic burdens for homeowners due to COVID-19. The change comes nearly three weeks after the agency extended the total forbearance period to 15 months.

When Congress passed the Coronavirus Aid, Relief and Economic Security Act last year, it allowed borrowers with federally backed mortgages to request up to 12 months of forbearance — divided into two 180-day increments — if they experienced financial hardship.

In forbearance, a borrower is allowed to suspend payments by extending the loan's terms. There is no set cutoff date for the 18-month forbearance period because borrowers have entered and exited forbearance at different times.

Bloomberg News

The FHFA also said Thursday that it was extending a moratorium on foreclosures and real estate-owned evictions until June 30 for loans backed by Fannie and Freddie. Because housing prices have jumped dramatically, borrowers are more likely to be able to sell their homes than go into foreclosure than in financial crisis in 2008, when many were underwater on their mortgages.

The foreclosure moratorium had been set to expire on March 31, but the FHFA is offering another three-month extension only for single-family mortgages backed by the government-sponsored enterprises. The REO eviction moratorium applies to properties acquired by the GSEs through foreclosures or deed-in-lieu transactions.

Earlier this month, the Biden administration announced similar extensions of relief for loans backed by the Federal Housing Administration, Department of Veterans Affairs and Department of Agriculture.

“Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government,” FHFA Director Mark Calabria said in a press release. “Borrowers and the housing finance market alike can benefit during the pandemic from the consistent treatment of mortgages regardless of who owns or backs them.”

Roughly 2.6 million homeowners were in forbearance plans as of Feb. 14, representing 5.29% of loans serviced, the Mortgage Bankers Association said Monday.

The share of Fannie- and Freddie-backed loans in forbearance fell slightly to 2.97% last week, from 3.01% on Feb. 8, the MBA said. By comparison, 5.22% of all loans serviced are currently in forbearance plans, the MBA said.