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You Can Now Request COVID-Related Mortgage Forbearance for Up to 18 Months

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Some good news for homeowners struggling to make ends meet thanks to COVID-19, which as the name implies has been going on for a while now.

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has just announced an extension to the COVID forbearance period, which was previously capped at 360 days.

Now borrowers who requested mortgage forbearance back in March or April of 2020 will be able to get another few months to keep monthly payments on hold.

COVID-Related Mortgage Forbearance Extended Another Six Months

  • Homeowners with a Fannie/Freddie-backed mortgage can now request an additional six months of forbearance
  • Originally allowed for an initial 180 days of payment relief (and an additional 180 days if the borrower needed more time)
  • Now borrowers can get a full 18 months of mortgage payment relief if in a COVID-19 forbearance plan
  • Applies to those who are in a COVID-19 forbearance plan as of February 28th, 2021

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) originally allowed homeowners with a federally-backed residential home loan to request forbearance for up to 180 days, or roughly six months.

It also included a 180-day extension if they were still struggling to make mortgage payments at the end of the original 180-day term.

Now the FHFA has gone a step further by allowing an additional six months of relief, for a grand total of 18 months of suspended mortgage payments.

In other words, a homeowner who is unable to pay their mortgage due to COVID-19 can now set aside payments for a whopping 540 days.

While it might sound excessive, it’s a sign of the lasting economic effects of COVID, which is now into its third year with no clear sign of slowing.

All 18 Months of Missed Mortgage Payments Can Be Deferred

  • Homeowners who request all 18 months can also set aside the full amount to repay later
  • The COVID-19 Payment Deferral option has been adjusted to cover up to 18 months of missed payments
  • The missed payments are not due until the home is sold, the mortgage refinanced, or when the loan matures
  • This should make it easier for those struggling with a COVID-19 income disruption to remain in their homes

In line with the six-month extension, the FHFA noted that it will also allow borrowers to defer the full 18 months of mortgage payments via the COVID-19 Payment Deferral option.

This means they won’t need to repay any of that sum until the underlying property is sold, the mortgage is refinanced, or when the home loan matures.

Do keep in mind that there is a three-month waiting period to get a mortgage after forbearance ends.

So if you request another extension, you’ll have to wait that little bit longer to get a subsequent mortgage backed by Fannie Mae or Freddie Mac.

The FHFA also extended the moratoriums on single-family foreclosures and real estate owned (REO) evictions until June 30th, 2021.

Previously, they were set to expire on March 31st, 2021. The foreclosure moratorium applies to Fannie- or Freddie-backed, single-family mortgages only.

And the REO eviction moratorium applies to properties acquired by Fannie or Freddie via foreclosure or deed-in-lieu of foreclosure transactions.

The only lingering question now is the deadline to apply for mortgage forbearance, which appears to be a moving target.

While you can now apply until June 30th, 2021 if you have an FHA loan, USDA loan, VA loan, or Fannie/Freddie loan, that date may also change.

Whether that date gets extended remains to be seen, but my guess is they’ll push that date out as well. Still, if you need help, you probably don’t want to waste time in case they don’t.

Get Up to 18 Months Forbearance for a Government-Backed Home Loan

  • The forbearance enrollment window for FHA/USDA/VA loans has been extended until June 30th, 2021
  • Borrowers who entered forbearance on/before June 30th, 2020 will also get an additional six months of relief
  • Will be offered in two 3-month increments to borrowers who need more assistance
  • This provides a total of 18 months of suspended mortgage payments for those who have been in a plan since last year

Just one week after the FHFA announcement, the White House delivered even better news for those with a government-backed home loan.

If you have an FHA loan, USDA loan, or VA loan, you can now request mortgage forbearance until June 30th, 2021.

Additionally, loan servicers must now provide up to six months of additional mortgage payment forbearance on top of the original 360 days outlined in the CARES Act to use who are already in plans.

In other words, you can get a full 18 months of forbearance as long as you entered forbearance on or before June 30th, 2020. Note the year 2020, not 2021.

The extension will be offered in two three-month increments, so you’ll initially get 12 months of relief, followed by six more months for up to 18 months total if you make the request.

It’s clear the powers that be are doing everything in their capacity to avoid another housing downturn, which was my expectation given the widespread damage of the pandemic.

And the fact that it wasn’t anyone’s fault this time around. Now we’ll have to wait and see if Fannie/Freddie extend to 18 months as well…

In summary, if your mortgage is backed by Fannie Mae or Freddie Mac, you can request a maximum of 18 months of forbearance as long as you’re in COVID-related forbearance plan as of February 28th, 2021.

If your mortgage is backed by the FHA, USDA, or VA, you can request a maximum of 18 months of forbearance as long as you’ve in been a COVID-related forbearance plan since June 30th, 2020.

Those who entered a plan after these dates appear to only get the standard 12 months of assistance.

Colin Robertson

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