Borrowers with mortgages backed by Fannie Mae and Freddie Mac may be eligible for an additional forbearance extension of up to six months, the Federal Housing Finance Agency announced Thursday.
On Feb. 9, the FHFA extended forbearance plans an additional three months past beyond their initial 12 month expiration. With the latest edict, the agency is now allowing borrowers up to 18 months of coverage.
According to the FHFA, eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of Feb. 28, 2021. The FHFA said other limits may apply to the extension but did not provide further details.
With the new extension set in motion, some borrowers may now be in forbearance through Aug. 31, 2022.
The FHFA extended its multifamily forbearance policies in December, pushing forbearance options for multifamily mortgages backed by the GSEs to March 31, 2021, though the agency has yet to say whether the latest extension will also be offered to owners of multifamily properties.
From forbearance to post-forbearance: How to make the process effective
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Alongside its forbearance announcement, the FHFA also said the GSEs will be extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions through June 30, 2021 – three months past the previous deadline set for Mar. 31, 2021. The new date matches the moratorium set by HUD for FHA and USDA loans.
According to FHFA director Mark Calabria, borrowers and the capital markets investors both benefit from consistent treatment.
“From the start of the pandemic, FHFA has worked to keep families safe and in their home, while ensuring the mortgage market functions as efficiently as possible,” Calabria said in a statement Thursday. “Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government.”
As of Feb. 22, the Mortgage Bankers Association estimates 2.6 million homeowners are in some form of forbearance. The MBA reported on Monday that the portfolios of Fannie Mae and Freddie Mac dipped down to 2.97%. The GSEs have consistently had lower forbearance rates than other owners of mortgages during the pandemic.
Economic data is starting to show some of the effects of long-term moratoriums. Black Knight’s December mortgage monitor report revealed that foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums protected homeowners.
According to Black Knight, recent forbearance and foreclosure moratorium extensions have reduced near-term risk, but at the same time may have the effect of extending the length of the recovery period.
Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021, when the first wave of plans reaches their 12-month expirations.
