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Financial Services Law Insights and Observations

FHFA extends foreclosure moratorium, increases forbearance and deferral timelines

Federal Issues FHFA Covid-19 Fannie Mae Freddie Mac GSE Forbearance Foreclosure Mortgages

Federal Issues

On February 9, the FHFA announced that Fannie Mae and Freddie Mac (GSEs) will extend their moratorium on single-family foreclosures and real estate owned (REO) evictions until at least March 31 (which was set to expire on February 28, previously covered here). The foreclosure moratorium applies to homeowners with a GSE-backed, single-family mortgage only, and the REO eviction moratorium applies to properties that were acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. Additionally, FHFA announced that borrowers may be eligible for up to a three-month forbearance extension so long as they are on a Covid-19 forbearance plan as of February 28 (details on the Covid-19 forbearance covered by InfoBytes here) and the Covid-19 payment deferral may now cover up to 15 months of missed payments (previously covering up to 12 months of missed payments, additional details covered by InfoBytes here).

Additionally, FHFA issued an extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA extended until March 31 existing guidelines related to: (i) alternative appraisal requirements on purchase and rate term refinance loans; (ii) alternative methods for documenting income and verifying employment before loan closing; and (iii) expanding the use of power of attorney to assist with loan closings.

The extensions are implemented in updates to Fannie Mae Lender Letters LL-2021-02, LL-2021-03, LL-2021-04; LL-2021-07; and Freddie Mac Guide Bulletin 2021-6; Bulletin 2021-7 and Selling FAQs.

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