The Federal Housing Finance Agency announced Wednesday that it will extend Fannie and Freddie’s ability to purchase some single-family mortgages in forbearance to continue to support the liquidity of mortgage lenders during the pandemic.
FHFA originally put the policy in place in April in response to borrowers seeking mortgage forbearance shortly after closing on loans – and before the lender could deliver the loan to Fannie Mae or Freddie Mac. Prior to the change, loans in forbearance were ineligible to be sold under Fannie and Freddie requirements, placing the borrower and the lender in jeopardy.
The latest extension covers loans originated through November 30.
“Eligible loans will continue to be priced to mitigate the heightened risk of loss to the Enterprises from said loans,” FHFA said in a statement. “These prudential measures also ensure fulfillment of the Enterprises’ charter requirements to only purchase loans that meet the purchase standards imposed by private, institutional mortgage investors.”