Forbearance yet again!
Here we go again, in less than a week, we get two significant changes from the FHFA concerning forbearance. First was the announcement that payments may be deferred to the end of the loan term, free of interest or other charges. So people could just avoid 12 months of payments and wait until they sell the house or until the end of the term to complete the agreement.
We spoke about how this would further push the situation and possibly the potential credit implications down the road. The belief was, people had to complete all the aspects of the forbearance, and then wait a minimum of one year before being eligible for another agency loan.
Well now the FHFA has modified that to state that for those that went into forbearance but kept making payments; they had to conclude the forbearance and make three payments before being eligible to refinance or purchase with an agency loan.
It begins to get a little more complicated for those who did miss payments. For those people, they must conclude the forbearance agreement and make three payments in order to refinance or buy a house with an agency loan. I have seen mixed interpretations if that means making payments including some or all of the money not paid, or that they will be deemed current once any repayment or deferment is agreed too!
Here is my warning! Check with YOUR Company and your INVESTORS before telling anyone what they can and can’t do when it comes to getting a new loan from anyone if that client was in forbearance in any way at all! Just because the FHFA says something is okay, it doesn’t mean your company or your investors will go along with it! Since not all people are in the same situation, be SURE you are very clear about what you can do and what that cost may be! You saw what happened just a few weeks ago when credit scores and cash out refinances all went crazy with pricing and overlays! DON’T ASSUME ANYTHING!
On a lighter note, business is strong and getting stronger every day! Individuals and companies are setting records in April and May, and now as the country begins to become more comfortable with the thought of buying and selling homes, I am sure the push to more banner months are in front of us! Imagine what we would be seeing if we didn’t have to deal with the coronavirus?
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