April 22 (UPI) -- Mortgage leaders Fannie Mae and Freddie Mac will purchase home loans to go into the federal government forbearance program soon after they close, the Federal Housing Finance Agency said Wednesday.
The agency said in a statement that some borrowers had asked for payment forbearance shortly after closing on their single-family home loans but before the lender could deliver the mortgage loan because of the coronavirus pandemic.
Restrictions forbidding such actions have now been lifted for a limited period of time and for mortgages meeting certain eligibility criteria, the agency said. It said eligible loans will be priced to lessen the risk to the agency.
Fannie Mae and Freddie Mac had refused to purchase loans that had recently closed, making it harder for all borrowers to find new loans. Lenders became afraid of being left with loans that would not be able to sell.
"We are focused on keeping the mortgage market working for current and future homeowners during these challenging times," Director Mark Calabria said in a statement. "Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending."
Some of the criteria include that the mortgage loan must have closed on or after Feb. 1 and on or before May 31, be a mortgage purchase transaction or a no-cash-out refinance, and cannot be more than 30-days delinquent.
"We welcome the change in policy that directs the [government-sponsored enterprises] to purchase most loans in forbearance," Bob Broeksmit, chief executive of the Mortgage Bankers Association said. "We're looking forward to working with FHFA and the GSEs to arrive at more appropriate pricing and broad coverage for all transaction types."