FHFA Won’t Require Lump-Sum Payment After Forbearance

April 27, 2020

The Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac, said Monday that it will not require homeowners who take mortgage forbearance due to financial hardship from the COVID-19 pandemic to make up the missed payments in a lump sum.

The FHFA made the announcement after news stories cautioned that homeowners who take forbearance would be on the hook to repay missed payments in a lump sum as soon as their forbearance period ends. Recent stimulus legislation had not clarified the repayment process. Borrowers with Fannie- and Freddie-backed loans who take forbearance will be contacted by their mortgage servicer before the end of their forbearance period to work out repayment options, which may include modifying the loan so the borrower’s payments are added to the end of the mortgage.

So far, more than 3.4 million homeowners—or 6.4% of all U.S. mortgage loans—are now in forbearance, according to data firm Black Knight Financial. In some cases, mortgage servicers have offered forbearance periods of up to a year. “During this national health emergency, no one should be worried about losing their home,” FHFA Director Mark Calabria said in a statement. “While today’s statement only covers Fannie Mae and Freddie Mac, I encourage all mortgage lenders to adopt a similar approach.”