Fannie Mae and Freddie Mac have announced additional relief options for homeowners struggling due to the COVID-19 pandemic.
According to announcements from the two companies last week (May 13), homeowners in forbearance can now request payment deferrals as early as July 1. This allows any missed payments to be made up at the end of the loan’s term, without any penalty or added interest.
The companies previously announced a plan to allow homeowners up to 12 months of forbearance—essentially letting anyone impacted by COVID-19 pause their mortgage payments for a full year. What would happen once that forbearance period ran out, though, was up in the air.
Now, there’s a clear option in place. As soon as homeowners are able to resume their normal monthly payments, they can reinstate their mortgage and enter a payment deferral program, making up their missed payments years or even decades down the road when the home is sold or refinanced.
Other options exist, too. Homeowners can also settle up on their missed balance in full, if they’re able to, or they can set up a repayment plan to gradually catch up over time. Loan modifications, which change the terms of the original loan agreement, are also a possibility depending on the borrower’s situation.
Fannie Mae explains the program: “Homeowners can resume their regular monthly mortgage payment after up to 12 months of missed payments, and the missed payments are deferred—or moved—to the end of the loan term.
“This option is for homeowners who have completed a COVID-19 related forbearance plan and are able to continue making their full monthly contractual payment but cannot afford full reinstatement or a repayment plan to bring their mortgage loan current.”