Freddie Mac has laid out options that borrowers who
have been granted forbearance on its loans have when it comes to repayment. The
company's CEO
David Brickman stressed that borrowers will never be asked to repay missed
payments in one lump sum.
March,
the company, along with the other GSE Fannie Mae, announced several actions to
assist homeowners facing financial hardship due to COVID-19. These include
forbearance during which a borrower's payments are reduced or suspended. While
borrowers in forbearance must repay the missed payments, full repayment
immediately following forbearance is just one option open to them.
Brickman
said, "Simply put, if you
are a homeowner seeking forbearance and Freddie Mac owns your loan, you are
never required to make up missed payments in a lump sum. Our policies offer a
number of options to bring borrowers current. We encourage homeowners facing
hardship to work with their servicer to identify the plan that's appropriate
for their unique situation."
Homeowners with a
hardship can have up to 12 months of forbearance although servicers will typically
start with a shorter timeframe, reassessing it over time. Once the hardship has
been resolved the homeowners will have the following options.
-
Full repayment or
reinstatement. Missed payments are repaid, putting the loan back on track
-
A repayment plan which
allows borrowers to pay their regular monthly payments and an additional amount
so they can catch up gradually.
-
Payment deferral or
modification. This would keep the monthly payments as originally agreed. The
missed payments are added to the end of the loan.
-
Loan modification.
Changing the interest rate, loan term, or some other feature to lower the
original payment amount.
Freddie Mac said
servicers will contact homeowners 30 days before the expiration of their
forbearance to discuss options. If borrowers feels a loan is not being handled properly,
they should contact the Consumer Financial Protection Bureau.
We assume similar
information will be forthcoming from Fannie Mae.