The Fannie Mae/Freddie Mac’s Forbearance & Deferral Programs
There has been a lot of uncertainty around how Fannie Mae/Freddie Mac’s Forbearance and Deferral programs will work and how the borrower’s credit will be effected by delaying payments.
This is a link right from Fannie Mae’s website. This is from March 18th, so although it is the most recent information, things can change and evolve. We are not, in any way, advocating that homeowners miss payments. In fact, we want to do the opposite. With that said, there are real life situations in which people need to be informed. Below is some guidance on what we know as of today.
As a homeowner, this is what we encourage:
Make your payments as best and as long as you can.
Before you start to miss ANY PAYMENTS, you need to contact your servicer (this is who collects your payments). When contacting your servicer, please be patient. The call volume will be extremely heavy right now. Your servicer can answer if your late payment will or won’t show up on your credit report. Your servicer can also answer whether or not your escrows will be effected.
Below we have shared an example as to how the Fannie Mae/Freddie Mac’s Forbearance and Deferral programs may work. This is just an example and is not meant to be the absolute for every homeowner. It very well could be different from this example.
Once the homeowner is able to reach the servicer, they will go through a series of questions. Let’s presume the servicer works out a 3-month plan for the homeowner’s $900/month payment. Under this plan, the borrower would delay their next 3 payments which total to $2,700. On the 4th month, the borrower will be required to make the 3 delayed payments, PLUS that 4th month payment, which totals to $3,600.
If the homeowner cannot make that $3,600 payment on month 4, they COULD ask the servicer to stretch out the 3 delayed payments over the next xxx number of months. The servicer doesn’t have to do this from what we understand, but it could be an option. The guidance from that point on is not yet clear from the information we’ve seen.
Once again, please visit Fannie’s link to their website as it pertains to this program.