Fannie Mae, Freddie Mac extend multifamily forbearance indefinitely

The Federal Housing Finance Agency’s latest extension of forbearance on multifamily loans bought by government-sponsored enterprises Fannie Mae and Freddie Mac was put in place on Friday without a specified end date.

So long as apartment owners with properties financed by Fannie and Freddie agreed to offer distressed tenants certain protections, borrowers with pandemic-related hardships can indefinitely extend forborne payments on their loans, according to the FHFA announcement.

This is one of the first actions the FHFA and the GSEs have taken to make a pandemic-related measure open-ended. Previously, multifamily forbearance use was more limited, mostly commonly utilized to address natural disasters.

“As financial and economic uncertainties around COVID-19 persist, Fannie Mae is committed to providing continued forbearance options for multifamily borrowers,” said Michele Evans, executive vice president at Fannie Mae, in a press release.

The renter protections extended as a condition of forbearance must be given to tenants in writing and include an agreement not to evict solely for nonpayment. Late fees or penalties can’t be charged for nonpayment. In addition, flexibility must be allowed in repayment such that it’s not necessarily structured as a lump sum.

Forbearance rates for multifamily loans have been extremely low and the uptake of forbearance has been slowing.

“Very few loans have started a new forbearance agreement, and no new forbearances were started in August, a first for the program,” Freddie Mac noted in a separate press release on Friday.

Master servicers report Freddie Mac’s securitizations had 304 forborne loans totaling $2.3 billion as of Aug. 25. That amount is equal to 0.6% of the outstanding unpaid principal balance of the bonds and 1.1% of the total mortgages in the GSEs’ mortgage-backed securities by loan count.

As of June 30, the percentage of multifamily UPB with forbearance at Fannie Mae was 1.2%, according to the GSE’s second-quarter 10-Q filing with the Securities and Exchange Commission.

Fannie’s number reflects total loans in forbearance since the pandemic started, excluding those that liquidated before the end of the period but including those in foreclosure. Freddie Mac’s number reflects active loans in forbearance.

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button