Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Refinance home loans in-forbearance!
The Federal Housing Finance Agency is making it easier to refinance your mortgage after being in forbearance. Fannie Mae FNMA, +6.25% and Freddie Mac FMCC, +7.42% have issued temporary guidance stipulating that borrowers will be eligible to refinance or buy a new home if they are in a forbearance agreement, but are also current on their mortgage, the FHFA said Tuesday.
In other words, if a family has been granted the ability to skip mortgage payments, but continued to make them or reinstated their loan, they can get a new home loan.
“Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized,” FHFA Director Mark Calabria said in the announcement. “Today’s action allows homeowners to access record-low mortgage rates and keeps the mortgage market functioning as efficiently as possible.” Refinance home loans in-forbearance!
Additionally, borrowers will be allowed to get a new mortgage — whether it’s a refinance or purchase loan — three months after their forbearance ends and they have made three consecutive payments under their repayment plan, payment deferral option or loan modification. Typically, borrowers can only get a new mortgage, whether it’s to refinance or to buy a home, a year after their payments are up to date post-forbearance. That rule became a problem for many homeowners who said they were put into forbearance agreements accidentally, according to a report from CNBC. Some of these homeowners complained to the Consumer Financial Protection Bureau that lenders were not accepting their loan payments because they were put in forbearance, despite assurances to the contrary.
The old rule also may have created headaches for many homeowners who chose to enter into forbearance out of an abundance of caution. The CARES Act required servicers to provide any homeowner with a federally-backed mortgage with forbearance, essentially with no questions asked. That made it much easier to skip mortgage payments.
A recent survey from LendingTree TREE, +1.13% found that 70% of homeowners who were approved for forbearance didn’t need it and simply wanted a break from their monthly payments. The FHFA further announced Tuesday that Fannie and Freddie will be able to buy loans in forbearance for loans closed on or before June 30 through Aug. 31 of this year. Previously, the agency announced a new repayment option for borrowers with mortgages backed by Fannie and Freddie, which allows the homeowners to skip payments and pay back the balance owed either when the home is sold, when the loan is refinanced or at the end of the mortgage. Refinance home loans in-forbearance!
The inspiration for today’s edition came from this original article: https://www.marketwatch.com/story/mortgage-regulator-to-loosen-refinance-restrictions-for-home-loans-in-forbearance-2020-05-19
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