New York Gov. Andrew Cuomo is demanding that Fannie Mae and Freddie Mac change rules to ensure that several thousand homeowners who got a temporary reprieve from paying their mortgage after Superstorm Sandy do not face a sudden spike in payments.
Benjamin Lawsky, the superintendent of New York's Department of Financial Services, sent letters Tuesday to the CEOs at Fannie and Freddie and to their regulator, Edward DeMarco, head of the Federal Housing Finance Agency, urging them to give banks and mortgage servicers some flexibility in the treatment of forbearance repayments.
"Fannie and Freddie's own policies would let banks suddenly spike mortgage payments for thousands of Sandy victims who are still struggling to recover, rebuild and stay in their homes," Cuomo, a Democrat, said in a press release. "If no action is taken, these homeowners will be put at risk of falling off the foreclosure cliff."
But Fannie and Freddie both say current guidelines offer servicers plenty of flexibility to work with borrowers to repay the past-due amounts. Still, homeowners who received temporary forbearance from paying their mortgage for the past five months must work with their servicer to start repaying.
Homeowners have several choices. They can make a lump-sum payment of the total amount owed; opt for a repayment plan that stretches repayments over a longer period; work with their servicer to extend the forbearance period if they are waiting for an insurance payment; or request a loan modification.