FNMA and FHLMC
Loan Forbearance Policies
Did you lose your job? Suddenly, through no fault of your own, you are faced with trying to make your mortgage payment with severely restricted income. This program is designed to help someone exactly like you!
This is a Federal program under the Making Home Affordable programs. There are all kinds of programs that the Federal government is sponsoring. They all have the same goal—to get you to keep your house and get you payment relief.
This program in particular is a forbearance plan, where the lender will reduce the amount of your mortgage payment for a specific time. The lender will either cut the payment or reduce it to zero for 6 months. This extra time will allow you to look for a job and get back on your feet again.
There are rules, of course, like every Government program. Here is a list that sums all these up nicely:
· Must be PRINCIPAL RESIDENCE.
· Does NOT apply to second home, vacation home, or investment property.
· Must prove job loss.
· The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
· This plan does not apply to properties financed with an FHA or VA mortgage.
· Must show that job loss has caused financial hardship and will lead to default.
· Must show limited or no cash reserves to make monthly payments.
· Housing expenses must be more than 31% of gross income, before taxes.
· You don’t have to be current with your mortgage payments to apply.
It’s very important to understand what forbearance is and what it is not. It is NOT a principal reduction plan. For instance, if the property is over-leveraged or under water and you owe more on the property than what it is worth, it’s important to understand that the loan amount is NOT reduced. Also, it’s a “time out” only for a specific time frame. Once the forbearance period is over, you will have to make up all the missed payments in full. Your lender will work with you to develop a payment plan that will specify exactly how much you have to pay each month and how long it will take to repay.
A couple of other things to note are that your lender CANNOT foreclose on the property while the forbearance plan is in existence. As long as you are making your payments as agreed, the foreclosure process stops during the forbearance plan. Also, the lender cannot charge you any late fees while the forbearance plan is in existence, as long as the payments are made as agreed.
The nicest thing about this program is that it allows the servicers a lot of freedom. A “servicer” is the bank or company that your mortgage check goes to each month. The servicer does not have to ask permission of FNMA or FHLMC to grant the forbearance. They can grant it for 6 months w/o getting pre-approval. After 6 months, the servicer must ask FNMA or Freddie Mac for permission to extend the forbearance.
If you are interested in this program and feel that you meet the criteria, the first thing to do is find out whether you have a FNMA or a FHLMC loan.
Check if FNMA owns your loan: www.fanniemae.com/loanlookup or call 1-800-7FANNIE.
To check if Freddie Mac owns your loan: www.freddiemac.com/mymortgage or call 1-800-FREDDIE.
You can also ask your servicer. Talk to your servicer about your job loss as early as possible. The earlier you get assistance, the more options you have. Have your financial information in front of you when you talk to your bank. Before the bank offers you any option, they will want to know: how much is coming in (salary); how much is going out (mortgage & other housing expenses); other bills and debts (credit cards, car payments, child care, alimony, child support, food, student loans, etc.) , whether you are current or behind on all these bills.
For more information about these programs, go to www.efanniemae.com or www.freddiemac.com. For more housing options offered by the Federal Government, go to www.makinghomeaffordable.gov or call 888-995-HOPE (4673). This is a toll-free number that reaches HUD-approved housing counselors. This service is completely free to you.
Or, you are most welcome to contact me. My phone number is 909-972-1616 and my email address is firstname.lastname@example.org. I’d be happy to help you in all the ways I can.