Freddie Mac announced on Friday afternoon that it is giving mortgage servicers expanded authority to provide six months of forbearance to unemployed borrowers without Freddie Mac's prior approval and up to an additional six months with prior approval. This new policy goes into effect Feb. 1.
Previously, Freddie Mac allowed servicers to grant up to three months of forbearance with no payment and without prior approval, or six months at a reduced payment with prior approval. Longer forbearance required prior approval and was generally restricted to events such as natural disasters, permanent disability or long-term medical emergencies. However, the government-sponsored enterprise notes that nearly 10% of delinquencies on Freddie Mac mortgages were tied to unemployment. As a result, mortgage servicers can now approve unemployed borrowers with Freddie Mac-owned or -guaranteed loans for six months of forbearance without prior approval from Freddie Mac.
‘These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies,’ says Tracy Mooney, senior vice president of single-family servicing and REO at Freddie Mac. ‘We believe this will put more families back on track to successful long-term homeownership.’