Forbearance Guidelines Updated for Conventional Financing

This week Fannie Mae and Freddie Mac updated guidelines for how soon home owners can obtain a new mortgage if they have entered into a forbearance agreement with their current lender. Most of the focus with this program is that it’s not suppose to impact their credit score. Although the credit score may not be impacted, the credit report reflects that payments were not made on the mortgage. It seems that many home owners are not aware that taking advantage of not having to make mortgage payments will impact their ability to get a new mortgage for refinancing or buying a new home.

Fannie Mae and Freddie Mac offered clarity with their new guidelines this week. If you currently have a conventional mortgage, it is a Fannie Mae or Freddie Mac mortgage. Basically, if you opt for the forbearance program that’s being offered due to covid-19, then you may not be able to get a new mortgage until you have have made three months of on-time mortgage payments. If a borrower has stayed current with their mortgage, they may still be eligible for new mortgage. There may be some variances with this depending on what type of forbearance program you have entered into as well as lender underwriting overlays.

Mortgage servicers really should be making it clear to home owners what the penalties may be should they opt take advantage of forbearance. In fact, in my opinion, borrowers should be provided an easy to understand written disclosure on what their options are, how the forbearance is resolved and what the effects may be afterwards, such as the very likely possibility they will not be able to qualify for a mortgage until they have made three on-time mortgage payments. By the way, the three month time frame is MUCH better than what industry experts were predicting ranging from 12 months to a couple years if treated as a pre-foreclosure.

Bottom line, if covid-19 has impacted your income, as it has for many, and you need help with your mortgage, please contact your mortgage servicer as soon as possible and be sure to ask them what the impacts will be once you enter into forbearance: what happens with the missed mortgage payments (when are the missed payments due), how soon can you obtain your next mortgage to refi or buy a home, etc.

If you are currently employed, you may qualify to refinance now during historic record low rates. I have been helping Washington home owners dramatically drop their mortgage payments and some are taking cash out to eliminate debt or build their savings for these times. Please let me know if I can help you.

Take care and stay safe!

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Governor Jay Inslee clarifies requirements for Loan Officers and Real Estate Agents during the Pandemic

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Getting a Mortgage During the Coronavirus

What strange times we’re in! Last night, Governor Inslee declared we are in a minimum two week “shelter in place” with only essential businesses allowed to operate, unless you can work from home.

Mortgage companies are currently considered essential and Mortgage Master Service Corporation is open to help you with your mortgage needs. I am currently working from my home office as I navigate mortgage rates that are off the charts! We are still helping people with their refinances and home purchases. [Read more…]