Many homeowners will be able to suspend their mortgage payments for up to 12 months under the terms of new plans offered by the federal housing finance agencies. From Wolf Richter at wolfstreet.com:
“The mortgage market has more risk than previously acknowledged.”
The Government-Sponsored Enterprises Fannie Mae and Freddie Mac, and the government agency Ginnie Mae, which guarantee $7.5 trillion in mortgages and turn them into mortgage-backed securities (MBS), have rolled out a wide-ranging support package for homeowners with mortgages that they guarantee, in order to keep the mortgage market from collapsing.
One of those measures is their support for “mortgage forbearance.” And homeowners are now picking up on it, according to the Mortgage Bankers Association. But it has thrown the entire mortgage market, including MBS, and every business in it, upside down.
Generally, in a mortgage forbearance agreement, the lender agrees not to exercise its legal right to foreclose on the delinquent mortgage, and the borrower agrees to a mortgage plan that will require the borrower to eventually become current again. These are not free gifts or grants, but deferrals.
The stimulus package, signed into law on March 27, mandates that all borrowers with government-backed mortgages be allowed to delay for at least 90 days their monthly mortgage payments.
