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As the Federal Housing Finance Agency (FHFA) continues its work to support homeowners impacted by the coronavirus pandemic, the government-sponsored enterprises (GSEs) are offering a new payment deferral option for loans in forbearance. NAFCU is supportive of this move as it will not change the monthly payment requirements for borrowers and will also allow the loan to remain in the mortgage-backed securities (MBS) pool.

"NAFCU appreciates the FHFA’s commitment to providing mortgage borrowers with additional repayment options during the coronavirus pandemic," said NAFCU President and CEO Dan Berger. "Allowing homeowners to choose to defer payments to a later date would provide them with additional financial flexibility to makes ends meet. This policy change would also allow credit unions to preserve liquidity to lend to those in need, instead of being required to buy back loans from the GSEs. NAFCU welcomes this policy change as it helps homeowners and preserves the safety and soundness of credit unions and the mortgage industry."

Berger's response was also featured in National Mortgage News.

Under the CARES Act, borrowers experiencing financial hardship during the coronavirus crisis may request forbearance on single-family and multifamily loans sold to the government-sponsored enterprises (GSEs), and in response mortgage servicers must provide a forbearance that allows borrowers to defer their mortgage payments up to 180 days with an option for an additional 180-day extension.

In the announcement, the FHFA explained that the payment deferral option allows borrowers, who are able to return to making their normal monthly mortgage payment, the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity. Although a lump sum payment is not required by the GSEs at the end of forbearance, servicers are required to evaluate borrowers for one of the several repayment options – including the new payment deferral – generally referred to as a "hierarchy" of repayment and loan modification options.

Servicers are able to start offering the payment deferral repayment option July 1, 2020. Additional information related to mortgages and forbearance amid the coronavirus pandemic is available on Fannie Mae's and Freddie Mac's websites.

In efforts to provide mortgage servicers with relief as forbearance requests increase, the FHFA previously announced it will provide a four-month limit on advances of principal and interest payments for loans in forbearance sold to the GSEs and will also allow the GSEs to purchase mortgages in forbearance.

The Phase 4 relief package proposed this week by House Democrats includes an expansion of forbearance efforts. NAFCU will continue to work with the FHFA, Treasury, and Congress to ensure credit unions' concerns are addressed.