The Federal Housing Finance Agency (FHFA) and the US Department of Housing and Urban Development (HUD) announced on March 18 that they have directed Fannie Mae and Freddie Mac, the government sponsored enterprises (GSEs), to suspend foreclosures and evictions for at least 60 days due to the coronavirus (COVID-19) national emergency. The foreclosure and eviction moratorium provides relief to homeowners with a GSE-backed single-family mortgage.
In a previous measure, the FHFA had stated that it would provide payment forbearance to this same group of borrowers, allowing them to temporarily stop making mortgage payments and make them up later. FHFA states that it “will continue to monitor the coronavirus situation and update policies as needed.”
Fannie Mae and Freddie Mac have moved quickly to implement this directive, creating new and extraordinary loss mitigation options and issuing broad loss mitigation instructions to servicers (Fannie Mae; Freddie Mac). Mortgage servicers should keep careful watch over these and future developments to ensure compliance with Consumer Financial Protection Bureau (CFPB) Regulation X servicing rules and HUD’s complex loss mitigation requirements.
CFPB Director Kathy Kraninger commended the FHFA/HUD action as a proactive step for financial institutions in working with customers affected by the COVID-19 emergency.
On March 19, the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency released a statement encouraging financial institutions to work with affected customers and communities, particularly those that are low- and moderate-income. The statement encourages flexibility and forbearance.
We expect that the various financial regulators will announce additional consumer-relief provisions as the COVID-19 situation develops. We will keep you posted on key initiatives as they are announced.
Visit our Coronavirus COVID-19 resource page for more information on COVID-19 and other helpful industry resources during this challenging period.