FHFA to allow COVID forbearance for ‘rep and warrant’ relief

Fannie Mae and Freddie Mac will extend their representation and warrant policies for loans affected by natural disasters to also cover mortgages that have successfully exited a COVID-19 forbearance plan, the Federal Housing Finance Agency Director Sandra Thompson announced today.

FHFA’s rep and warrant policies currently allow the time the borrower is in forbearance because of a natural disaster to be included when demonstrating a satisfactory payment history in the first 36 months following origination. Under the change, these policies will also extend to loans for which borrowers elected a COVID-19 forbearance. The changes will be implemented starting Oct. 31.

“Forbearance was an invaluable tool for borrowers experiencing financial hardship due to the COVID-19 pandemic,” Thompson said. “Servicers went to great lengths to implement forbearance quickly amid a national emergency, and the loans they service should not be subject to greater repurchase risk simply because a borrower was impacted by the pandemic.”


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