Mortgage Deferral No Longer Limited to Pandemic-Related Hardships

April 12, 2023 - 3 min read

Payment deferral policies for borrowers facing financial hardship

Since 2011, the Federal Housing Finance Agency (FHFA), along with government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, have worked to develop policies that help loan servicers come up with alternative mortgage deferral solutions for payment delinquencies.

The goal? Help struggling homeowners keep their homes while minimizing losses to Fannie, Freddie, and taxpayers.

If you or someone you know is in need of mortgage payment relief, read on to learn how the latest mortgage deferral policy can help.

Talk to a lender about your options. Start here

Fannie and Freddie to offer six-month mortgage deferral

Over the past few years, this mortgage deferral has been offered to homeowners who had fallen behind on their mortgage payments due to financial hardships caused by the Covid-19 pandemic.

The FHFA recently announced enhanced mortgage payment deferral policies for homeowners facing financial hardship, opening up assistance that is no longer exclusive to homeowners who’ve had pandemic-related hardship.

Later this year, a six-month mortgage payment deferral will become a possibility for homeowners experiencing other eligible hardships.

How mortgage payment deferral works

Mortgage payment deferral is meant to help you get back on track so you can keep making your mortgage payments on time and stay in your home.

Payment deferral allows homeowners who have experienced financial hardship, and are able to resolve it, to keep their monthly mortgage payment the same by moving past-due amounts to the end of the loan.

The late payments become part of a non-interest-bearing balance that becomes due and payable at the maturity, sale, refinance, or payoff of the loan.

During the COVID-19 pandemic, Fannie Mae and Freddie Mac’s payment deferral policies were expanded. This allowed homeowners experiencing pandemic-related financial hardships to take advantage of mortgage payment deferral.

Now, because of the success of the COVID-19 payment deferral, the FHFA and the Enterprises (Fannie and Freddie) are enhancing the standard payment deferral policies, making payment deferral available to mortgage borrowers experiencing other eligible hardships.

According to FHFA Director Sandra L. Thompson, “The Enterprises completed more than one million COVID-19 payment deferrals during the pandemic, helping borrowers nationwide to stay in their homes. Based on the success of the COVID-19 payment deferral, we are making this solution a key part of our standard loss mitigation toolkit that is available to all borrowers with eligible hardships.”

Thanks to the newly enhanced policies, Fannie Mae and Freddie Mac will allow borrowers to defer up to six months of mortgage payments, enabling homeowners “to keep the same monthly mortgage payment by moving past-due amounts to the end of the loan as a non-interest-bearing balance, due and payable at maturity, sale, refinance, or payoff.”

Fannie Mae and Freddie Mac will work with servicers to implement the enhanced payment deferral policies, which carry a voluntary adoption date of July 1, 2023, and a mandatory adoption date of October 1, 2023.

Talk to a lender about your options. Start here

What to do if you’re facing financial hardship

If you’re behind on your mortgage and you qualify, payment deferral could help you catch up on your past-due home loan payments.

To find out if payment deferral is a viable option for you, homeowners experiencing financial hardship should contact their loan servicer to see if this is an appropriate solution based on their circumstances.

Depending on your individual situation, loan servicers may offer one of several solutions to resolve a delinquency, including the enhanced payment deferral, reinstatement, repayment plan, or loan modification.

The bottom line

If you’re experiencing a temporary financial hardship and need a mortgage assistance program, you may be eligible to find relief in many forms. This could help alleviate some of the financial and emotional stress.

While deferrals aren’t always the best choice for everyone, they are still worth looking into. To learn more about whether mortgage payment deferral is right for you, contact your lender today.

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Craig Berry
Authored By: Craig Berry
The Mortgage Reports contributor
With over 20 years in mortgage banking, Craig Berry has helped thousands achieve their homeownership goals.
Aleksandra Kadzielawski
Reviewed By: Aleksandra Kadzielawski
The Mortgage Reports Editor
Aleksandra is the Senior Editor at The Mortgage Reports, where she brings 10 years of experience in mortgage and real estate to help consumers discover the right path to homeownership. Aleksandra received a bachelor’s degree from DePaul University. She is also a licensed real estate agent and a member of the National Association of Realtors (NAR).