And FHFA Director Mark Calabria said in a Bloomberg Television interview last week that Fannie and Freddie, the mortgage giants that backstop about half of the nation’s $10 trillion housing market, might have to take delinquent loans on their books if missed payments pile up. Calabria’s agency regulates Fannie and Freddie, which have been under government control since the 2008 financial crisis.
Read More: Why the Mortgage Market Needs Its Fixes Fixed
Under the stimulus legislation, borrowers with loans insured by government agencies such as the Federal Housing Administration and the Department of Veterans Affairs would be eligible for forbearance. Consumers whose mortgages are backed by Fannie and Freddie would also be eligible to skip payments.
Who’s Eligible?
Borrowers would be eligible for 60 days of forbearance if they can demonstrate virus-related financial stress. The relief can be extended for 30 days up to four times.
While most of the new programs are aimed at helping home owners, the government is also trying to help renters too. The FHFA has granted mortgage forbearance to U.S. landlords in exchange for suspending evictions if renters can’t make payments.
Commercial borrowers with federally backed loans could potentially skip payments for at least 30 days with a possible extension of up to 60 additional days. Unlike individual consumers, businesses would have to document financial hardship and they would be barred from evicting tenants as long as they are missing mortgage payments.
Helping Renters
Officials are also considering taking additional steps to help renters, a group they have warned could cause further turmoil in the housing market as the crisis continues.
As the White House weighs a fourth round of stimulus measures, it’s considering recommendations from housing agencies that include providing help through existing state grant and voucher programs to help renters stay in their residences, according to people familiar with the matter. Talks are still in early their early stages and could change, the people said asking not to be named because the talks are private.
--With assistance from Saleha Mohsin, Prashant Gopal and John Gittelsohn.
This article was provided by Bloomberg News.