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FHFA Creates ‘Payment Deferral Option’ for Borrowers, Delivering Certainty to Homeowners

May 15, 2020 in Government Affairs

On May 14, the Federal Housing Finance Agency (FHFA) unveiled a new repayment option for homeowners struggling financially in the wake of the COVID-19 pandemic. Under the proposal, Fannie Mae and Freddie Mac will offer borrowers currently in forbearance the ability to repay missed principle and interest when their home is sold, refinanced or at maturity.

“NAR applauds the FHFA and Director Calabria for offering solutions and some much-needed certainty to the millions of U.S. families facing unemployment and unsure how they will cover next month’s bills. This flexibility will be invaluable for American consumers as we begin to emerge from this crisis and restart our economy,” said NAR President Vince Malta, broker at Malta & C, Inc., in San Francisco, Calif.

The FHFA’s new program creates “payment deferral option for borrowers.” Payment deferral takes the missed mortgage payments and puts them into a payment due at the sale or refinancing of the home, or at the end of the loan. The borrower’s monthly mortgage payment will not change. Mortgages that exercise the payment deferral option will remain in Enterprise Mortgage-Backed Securities, subject to the terms of the trust agreements. However, the borrower is responsible for taxes and insurance while in forbearance.

To ensure homeowners and renters have the most up to date and accurate housing assistance information during the COVID-19 national emergency, the Consumer Financial Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA) and the Department of Housing and Urban Development (HUD) launched the new mortgage and housing assistance website

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