Freddie Mac and Fannie Mae both announced on March 25th, 2020 that a two month deferral option is available for some borrowers who are facing a short term hardship (such as being laid off from a job because of COVID-19). If the borrower is able to resolve the hardship within that two month time period and can resume paying their mortgage payments in full, they will be eligible to defer those two months of payments to the end of their mortgage without needing to significantly modify the loan. The deferred payment and interest is due either on the mortgage maturity date, the pay-off date or upon the sale of the property, whichever comes first. Mortgage servicers will be able to start evaluating borrowers to see if they are eligible for payment deferrals beginning on July 1.
Original blog post regarding forbearance plans can be found here.
There is a lot of uncertainty as the number of COVID-19 cases rise in the United States. Schools have closed for the rest of the school year in Virginia and many businesses have had to close or scale back temporarily, meaning that some people have found themselves unemployed. In light of this crisis, Freddie Mac, Fannie Mae, and the Department of Housing and Urban Development (HUD) are suspending all foreclosures and evictions until May 17th, 2020. Similarly, the Supreme Court of Virginia has ruled to suspend all evictions for tenants who are unable to pay their rent now until April 6th. As events continue to unfold, these dates could be extended.
Freddie Mac and Fannie Mae both have forbearance plans for homeowners who are impacted by the COVID-19 outbreak. The forbearance plan reduces or suspends mortgage payments for 12 months. Borrowers in a forbearance plan will not incur late charges during that time. Additionally, the forbearance plan will suspend reporting to the credit bureau for past due payments. Keep in mind that a loan forbearance plan is best used for situations of temporary hardship since the interest continues to accrue even during the forbearance period.
Any homeowners who need mortgage assistance are strongly urged to reach out to their mortgage servicer at this time. It's important to note that some lenders may expect a lump-sum payment at the end of the 12 months while others may offer a repayment plan. Loan modifications may also be available.
The vast majority of borrowers have loans under Fannie Mae, Freddie Mac, or HUD. To see if your mortgage is owned by Freddie Mac, click here. To see if your mortgage is owned by Fannie Mae, click here.
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