Fannie Mae Extends Mortgage Relief for the Unemployed

Following the example set by Freddie Mac last week, Fannie Mae issued new guidelines to its servicers this week that allow lenders to suspend or reduce monthly payments for borrowers who are unemployed. Servicers can approve six months of unemployment forbearance without obtaining GSE approval and an additional six months after obtaining GSE approval[1]. The program is designed to help homeowners in danger of default and can be implemented in cases where homeowners have already missed payments[2]. However, not more than 12 payments total may be missed, and homeowners must pay back lower or skipped payments over a longer loan period. Both Fannie Mae and Freddie Mac have said that it is up to lenders to implement these new guidelines but they are requiring lenders to begin including consideration of a forbearance plan among other foreclosure prevention options.

Analysts remain largely skeptical of the new guidelines, with individuals like Joseph Gyourko, a professor of real estate at the University of Pennsylvania’s Wharton School, saying that although “this will save some of them [distressed homes],” some of the homeowners should never have been able to purchase their homes in the first place and will never be able to afford them. Gyourko calls the policy “humane and not at all unreasonable” but does not believe it will affect the housing problem much one way or the other.

Do you think that the GSEs’ forbearance programs are a good thing? Will they help in the long run?

*God Speed*
TLD Investments LLC


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