In efforts to address forbearance liquidity concerns posed by the industry, the Federal Housing Finance Agency (FHFA) announced changes to guidelines that limit the number of advance monthly principal and interest payments servicers will be required to send to investors on single-family mortgage loans in forbearance. These revisions align Fannie Mae’s policy with that of Freddie Mac. With this change, all GSE servicers, regardless of type or size, will only be required to advance four months of missed payments. Under the new policy, once a servicer has met the requirement, it is no longer obligated to advance scheduled payments.
In light of these changes, Proctor believes that it is important to remind servicers that they remain obligated for making advances for insurance premiums, real estate taxes, and mortgage insurance, even if a borrower’s escrow account has insufficient funds. Proctor encourages our clients to review internal policies and procedures to ensure compliance with this continuing requirement.
To review actions taken by FHFA related to COVID-19, please visit FHFA’s Coronavirus Resources website.