If you follow this blog regularly you’ve probably noticed that we’ve been talking a lot about forbearances under the CARES Act stimulus bill. New information seems to come out on a weekly basis, and now there’s another update from Fannie Mae and Freddie Mac.
A New FHFA Announcement
A big question that’s been looming is how a CARES Act forbearance flagged on a credit report will affect someone’s ability to refinance their loan or get another mortgage in the future. Last week, the Federal Housing Finance Agency (FHFA) announced that borrowers who went into forbearance due to a COVID-19 related hardship will still be able to refinance their loan or get a new mortgage. All that’s required is that they make three consecutive mortgage payments in accordance with their repayment plan once their forbearance period is over.
Before this announcement, it was understood amongst people in the industry that if someone had a CARES Act forbearance on their credit report, Fannie and Freddie would require them to wait a minimum of a year before they could refinance or get a new mortgage. So the waiting period has been shaved down by nine months.
For those who are able to pay back all of their outstanding payments at the end of their forbearance there will be no waiting period before being able to refinance or get a new mortgage. This also applies to borrowers who went into forbearance but ended up making their originally scheduled payments or those who were put into forbearance by mistake despite continuing to pay their bill on time—something several borrowers reportedly experienced.
Should You Put Your Mortgage into Forbearance?
If you’ve been considering going into a CARES Act forbearance, this new update definitely makes pausing your payments a more attractive option than it was before. However, there are still other factors you should consider—which will depend on your own unique situation—before making the commitment.
Do you have questions about going into forbearance or have another mortgage, real estate, or property management related question?
Then contact us at IET Capital to set up a free call or virtual meeting. We’re happy to work through any mortgage or real estate issues that have come up due to the economic shutdown.
You can call or text us at (323) 412-9060 or send us an e-mail through our contact form.