Introducing the Fannie Mae COVID-19 Payment Deferral
About Fannie Mae’s COVID-19 Payment Deferral
The health and economic impacts of the coronavirus creates a financial hardship for millions of American families. As a result, many families have set up a forbearance plan in order to stay in their homes and regain their financial footing.
A forbearance plan is an agreement if you are experiencing a temporary hardship to reduce or suspend your monthly mortgage payments for a period of time, for up to 12 months if you have been impacted by COVID-19. You may be eligible for additional forbearance if you are unable to resolve your financial hardship. However, once the forbearance period ends, you will need to work with your mortgage servicer to determine how to repay missed amounts. Keep in mind, you are not required to pay everything back all at once if you are not able to do so.
Fannie Mae offers different options if you have missed or on the verge of missing your monthly mortgage payments due to a financial hardship related to COVID-19. In May 2020, we introduced the COVID-19 payment deferral if you have been impacted by a COVID-19 related hardship to help you return your mortgage to a current status.
How COVID-19 payment deferral works:
The COVID-19 payment deferral may be the best option for you if your COVID-19 related hardship has been resolved and you are able to continue making your full monthly mortgage payment, but cannot afford a full reinstatement or a repayment plan to bring your mortgage loan current. This option defers your missed payments to the end of your loan term or earlier if the home is sold, the property is transferred, or the loan is refinanced or otherwise paid off.
Advantages of COVID-19 payment deferral:
- It does not require a trial period plan as required for a loan modification, which requires several months of payments prior to modifying your loan
- It keeps the principal and interest portion of your mortgage payment the same as it was prior to your COVID-19-related hardship. Note: Adjustments to the escrow portion of your monthly payment for taxes and insurance may affect your total monthly payment.
- You will not be charged interest on the missed payments that have been deferred.
If the eligibility requirements for COVID-19 payment deferral don’t match your situation, you have other mortgage repayment options:
Every homeowner’s financial situation is different. If COVID-19 payment deferral isn’t right for you, consider talking with your mortgage servicer about the following alternatives:
A reinstatement means that you pay any missed amounts all at once at the end of forbearance, if financially able to do so.
Your mortgage servicer will speak with you about your mortgage loan reinstatement at the end of the forbearance plan. Remember, this is only one of many options to discuss with your mortgage servicer. This may be the best option if you are financially able to repay the missed amounts all at once.
Your mortgage servicer may also speak with you about a repayment plan. A repayment plan allows repayment of missed amounts over a period of time, such as 3 or 6 months. A repayment plan requires you to make your regular monthly mortgage payment, plus an additional portion of the missed amount each month, until the missed amount is paid off. At the end of the repayment plan, you will resume making your regular monthly mortgage payment.
If your ability to pay your monthly mortgage payment has been permanently impacted by a financial hardship related to COVID-19, your mortgage servicer can work with you to modify your mortgage loan. A loan modification permanently changes the original terms of your mortgage. A loan modification may lower your monthly principal and interest payments and/or your interest rate, and typically involves extending the maturity date of your loan. Although a loan modification may lower your monthly payment, it may result in paying more interest over the life of the loan due to the extended repayment term. Adjustments to the escrow portion of your monthly payment for taxes and insurance can affect the total monthly payment.
If you already have a mortgage forbearance plan, the options above can help you make decisions about your financial future. If you don’t have a forbearance plan but think you might need one because you are experiencing a short-term hardship, talk with your mortgage servicer about your situation as soon as possible.
At Fannie Mae, we’re here to help you understand all the options that are available.
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