The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac borrowers in forbearance can apply for refinancing and new purchase mortgages once their loans are current It waives a previous mandatory wait of 12 months. That move allows faster access to record-low rates.
According to the FHFA, borrowers are eligible to refi or purchase a new home if they are current on their mortgage- in forbearance but continued to make mortgage payments or reinstated their mortgage. Borrowers are eligible to refinance or buy a new home three months after their forbearance ends and they have made three consecutive payments under their repayment plan, or payment deferral option or loan modification.
“Homeowners who are in COVID-19 forbearance, but continue to make their mortgage payment, will not be penalized,” said FHFA Director Mark Calabria. “Today’s action allows homeowners to access record low mortgage rates and keeps the mortgage market functioning as efficiently as possible.”
In addition to the 3 consecutive payments, underwriters will make sure the borrowers income and job (business) will be stable going forward, and any financial distressed position.
Effective 05/19/2020, the following guidance applies to all mortgage loans the borrower is obligated on, and all conventional transaction types. The reason for the borrower forbearance request, as well as any hardship, must be documented as overcome and not likely to recur. Any mortgage loan that has been, or is in forbearance will be analyzed as follows:
1. Borrower is current and has no missed payments.
For borrowers whose payments are current follow standard conventional guidelines.
2. Reinstatement
If the borrower resolved missed payments through reinstatement (i.e. loan is now current), the borrower is eligible for a new mortgage loan.
If the reinstatement was completed after the application date, the source of funds must be documented in accordance with standard policy.
3. Repayment Plan
The borrower must have resolved / completed the repayment plan; or
Have made at least 3 timely consecutive payments (whichever comes first) prior to close. The new loan can include the remaining payments under the repayment plan.
4. Payment Deferral
The borrower must have made at least 3 timely consecutive payments following the effective date of the payment deferral agreement. The new loan can include the remaining payments of the deferred amount.
5. Loan Modification
The borrower must have made at least 3 timely consecutive payments following the effective date of the Loan Modification Agreement. The new loan can be used to pay-off the modified mortgage.
This is a fast moving target, and changing constantly. No doubt the guidelines will change before the initial 3 month forbearance period will end. Stay tuned…
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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