FHFA to Limit Servicers’ Payment Advancement Obligations to MBS Investors Due to Pandemic

In a move to support mortgage markets today, the Federal Housing Finance Agency announced that it will limit servicers’ obligations to advance payments to mortgage-backed securities investors to four months. After four months, the GSEs will assume payment responsibility.

With this announcement, FHFA has aligned Fannie Mae and Freddie Mac’s policies regarding servicer obligations to advance scheduled principal and interest payments for single-family mortgage loans. The agency also clarified that loans in forbearance due to the coronavirus will not be purchased out of MBS pools by Fannie and Freddie. Rather, they will be treated as a natural disaster event and remain in the pool, reducing potential liquidity demands on the GSEs.

This marks the latest step the FHFA has taken to support mortgage markets during the pandemic. The agency noted that it would “continue to monitor the impact of the coronavirus national emergency on the housing finance market” and make policy updates as needed.