Democratic bills would bar GSEs from charging forbearance fees
WASHINGTON — A new proposed bill would prevent Fannie Mae and Freddie Mac from charging fees for acquiring loans put in forbearance because of the coronavirus pandemic.
Sen. Bob Menendez, D-N.J., unveiled the Promoting Access to Credit for Homebuyers Act on Wednesday. The bill would require the two government-sponsored enterprises, as well as the Federal Housing Administration, to continue backing mortgages subject to forbearance plans without imposing additional restrictions or costs on borrowers or lenders.
“We must ensure that homebuyers facing financial strain are not arbitrarily denied access to mortgage credit throughout this emergency,” Menendez said. “This bill will help remedy the Trump administration’s ongoing failure to support hard working families and consumers facing hardship and delivers critically needed stimulus to our economy.”
A companion bill in the House to prohibit such fees has been introduced by Rep. Juan Vargas, D-Calif.
The Coronavirus Aid, Relief, and Economic Security Act passed in March allowed a six-month forbearance period for homeowners with federally backed mortgages. They can then seek an additional six months of forbearance if they have been affected by the COVID-19 pandemic.
The Federal Housing Finance Agency later announced that while Fannie and Freddie could buy loans already in forbearance, the GSEs would charge originators a loan-level pricing adjustment of 5% to 7%. The added cost was seen by many in the industry as too steep.