Published: May 20, 2020 at 9:19 a.m. ET
By Jacob Passy
People will have an easier time refinancing loans backed by Fannie Mae and Freddie Mac following being in forbearance based on new rules regulators are putting in place
The Federal Housing Finance Agency is making it easier to refinance your mortgage after being in forbearance.
Fannie Mae FNMA, +6.25% and Freddie Mac FMCC, +7.42% have issued temporary guidance stipulating that borrowers will be eligible to refinance or buy a new home if they are in a forbearance agreement, but are also current on their mortgage, the FHFA said Tuesday.
In other words, if a family has been granted the ability to skip mortgage payments, but continued to make them or reinstated their loan, they can get a new home loan.
“Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized,” FHFA Director Mark Calabria said in the announcement. “Today’s action allows homeowners to access record-low mortgage rates and keeps the mortgage market functioning as efficiently as possible.”
Additionally, borrowers will be allowed to get a new mortgage — whether it’s a refinance or purchase loan — three months after their forbearance ends and they have made three consecutive payments under their repayment plan, payment deferral option or loan modification.