Buying or Refinancing After Mortgage Forbearance: FHFA Updates
Fannie Mae and Freddie Mac have introduced two new policy changes that will positively impact homeowners in need of financial relief during COVID-19. If you have a loan backed by The Federal Housing Finance Agency, here’s an overview of what has changed.
On Tuesday morning, The Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will now allow borrowers who went into COVID-19 forbearance refinance or purchase a new home as early as three months after their forbearance period ends. The three-month waiting period applies to borrowers who’ve made at least three consecutive payments under their repayment plan.
Also, if a homeowner is in forbearance but continued to make mortgage payments or reaffirmed their mortgage, they may be eligible to refinance or buy without any waiting period.
Before this update, homeowners in forbearance would have to wait 12 months after forbearance ends to be eligible for another mortgage. With 4.1 million homeowners currently in forbearance, this news will prevent many Fannie Mae and Freddie Mac borrowers from missing out on the opportunity to take advantage of buying or refinancing while interest rates remain low.
A month before this announcement, FHFA also announced that they would purchase certain single-family mortgages if they went into forbearance within one month of closing. This policy will extend through August 31st.
“We are focused on keeping the mortgage market working for current and future homeowners during these challenging times,” said Director Mark Calabria. “Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending.”
Both announcements provide relief for Fannie Mae and Freddie Mac borrowers and mortgage lenders. As always, every financial situation is unique; our team of loan experts can help you navigate the rules and how they affect your specific situation.
