WASHINGTON—The Federal Housing Finance Agency (FHFA) announced changes to loan modification terms for COVID-19 impacted borrowers with mortgages backed by Fannie Mae or Freddie Mac needing payment reduction for successful home retention.
The announcement is separate from that made one day earlier in which the FHFA said Fannie Mae and Freddie will not be permitted to make a first notice or filing for foreclosure that would be prohibited until new rules from the CFPB take effect, as CUToday.info reported here.
Regarding the loan modifications, the updated terms are specifically for borrowers with permanent COVID-19 hardships and respond to the unprecedented nature of the pandemic, the agency said.
Flex Modification terms will be adjusted for COVID-19 hardships making interest rate reduction possible for eligible borrowers, regardless of the borrower's loan-to-value ratio.
Previously, only borrowers with mark-to-market loan-to-value (MTMLTV) ratios greater than or equal to 80% were eligible for a possible interest rate reduction, the FHFA noted.
Preventing ‘Unnecessary Foreclosures’
MTMLTV is a ratio that compares the balance remaining on the mortgage to the current market value of a home.
“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," said Acting Director Sandra L. Thompson.