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.”