Legal Alert

Fannie Mae and Freddie Mac Announce the End to Purchases of Loans in a COVID-19 Forbearance

by the Mortgage Banking Group
August 18, 2020

As previously reported, subject to conditions, Fannie Mae and Freddie Mac will purchase loans in a COVID-19 forbearance if the eligible loans have note dates through August 31, 2020. One of the conditions is an additional pricing adjustment of 5 percent if the borrower is a first-time homebuyer and 7 percent for other loans.

In recently issued updates to their respective COVID-19 selling FAQs, Fannie Mae and Freddie Mac advise that there are no plans to extend the note date past August 31, 2020. For eligible loans with note dates on or before August 31, 2020, the loans must be delivered to Fannie Mae by, and the settlement date with Freddie Mac must be on or before, October 31, 2020. Loans with note dates after August 31, 2020, that go into COVID-19 forbearance after closing will not be eligible for sale to Fannie Mae or Freddie Mac.

As previously reported, legislation introduced in Congress would require Fannie Mae and Freddie Mac to purchase, and FHA to insure, mortgage loans involving a COVID-19 forbearance, or a request or inquiry regarding such a forbearance, without additional conditions related to the forbearance, request, or inquiry. 

Copyright © 2020 by Ballard Spahr LLP.
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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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