The rapid increase in unemployment due to COVID-19 has caused many brand new mortgage customers, with either a refinance or purchase, to apply for forbearance relief. This means they will not have to pay their mortgage for up to 12 months without penalty or negative effects on their credit score.

The problem… Traditionally, Fannie Mae and Freddie Mac will not purchase mortgages in forbearance as they are considered ineligible. If Fannie Mae or Freddie Mac were not to help with buying these new mortgages subject to forbearance, mortgage lending would be troubled with many lenders unable, or even unwilling, to lend.

Help is on the way… According to the Federal Housing Finance Agency (FHFA) as of April 22, both government agencies will now allow forbearance purchases, under certain guidelines, in hopes of keeping servicers liquid where they can continue to lend. Additionally, for borrowers as of April 27, FHFA Director Mark Calabria stated there will be “No lump sum requirement at the end of forbearance.” Borrowers will now have repayment options that could include a loan modification, where the borrower’s payments are added to the end of their mortgage, or a plan that will reduce their monthly payments after forbearance.

But, not without a cost. According to the FHFA, Fannie Mae and Freddie Mac would include a “fee” to purchase new loans in forbearance and to mitigate future risk, and it’s hefty – representing a 5% fee for purchase loans, and up to 7% for refinances.

Note: New guidelines and regulations are being introduced frequently as the government attempts to help consumers and lenders. We’ll pass along updates as they are made available.


We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.