FHFA announces changes to loan modification terms for COVID-19 impacted borrowers

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The Federal Housing Finance Agency (FHFA) recently announced that it has initiated altered loan modification terms for COVID-19 impacted borrowers with Fannie Mae or Freddie Mac supported mortgages.

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The revised terms seek to provide aid to borrowers with permanent COVID-19 hardships in response to the unprecedented circumstance resulting from the pandemic. ​Flex Modification terms are slated to be altered for COVID-19 hardships, making interest rate reduction possible for eligible borrowers, regardless of the borrower’s loan-to-value ratio.

“Allowing more families to qualify for an interest rate reduction will prevent unnecessary foreclosures, help strengthen the Enterprises’ books of business, and make sustainable homeownership a reality for more families currently living with the uncertainty of forbearance,” Acting Director Sandra L. Thompson said.

Prior to the new guidance, only borrowers with mark-to-market loan-to-value (MTMLTV) ratios greater than or equal to 80 percent were eligible for a possible interest rate reduction.

The FHFA indicated it would continue to monitor the impact of COVID-19 servicing policies on borrowers, Fannie Mae and Freddie Mac, their counterparties, and the mortgage market – reserving the right to extend or sunset its policies in consideration of updated data and health risks.

The agency is encouraging homeowners and renters to visit consumerfinance.gov/housing to gather the latest information on relief options, protections, and deadlines.

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