Borrowers in forbearance can refinance under certain conditions: FHFA
WASHINGTON — The Federal Housing Finance Agency issued guidance Tuesday clarifying that borrowers with Fannie Mae- or Freddie Mac-backed mortgages who have entered into forbearance plans can be eligible to refinance or purchase a new home once they are considered “current” on their mortgage.
Borrowers can either refinance or buy a new home once they have made three consecutive mortgage payments, either after their forbearance ends or under a repayment plan or loan modification, the agency said.
Borrowers who also continued to make mortgage payments while their loan was in forbearance will be eligible to refinance, the FHFA said. CNBC had reported last week that some homeowners were mistakenly placed in forbearance plans without their knowledge, and they were unable to refinance their loans.
"Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized," FHFA Director Mark Calabria said in a press release. "Today's action allows homeowners to access record low mortgage rates and keeps the mortgage market functioning as efficiently as possible."
The FHFA also said Tuesday that it would extend the government-sponsored enterprises’ ability to buy mortgages that are subject to forbearance plans beyond a previous May 31 deadline.
Fannie and Freddie will now be able to buy loans in forbearance that have closed on or before June 30, as long as they are sold to the GSEs before Aug. 31 and the borrower has missed only one mortgage payment.