FHFA Reduces Interest Rates To Help Borrowers Suffering COVID-19 Hardships

The Federal Housing Finance Agency (FHFA) made changes to loan modification terms for borrowers impacted by COVID-19, who need payment reduction in order to retain their homes. Eligible borrowers must be suffering permanent COVID-19 hardships and have their mortgages backed by Fannie Mae or Freddie Mac. 

Flex modification terms will be adjusted so borrowers can pay a reduced interest rate, regardless of their loan-to-value (LTV) ratio. Previously only borrowers with 80% market-to-market LTV ratios were eligible for a possible interest rate reduction. Now, anyone who suffered permanently from the pandemic will have an easier time making their mortgage payments, lowering the number of avoidable foreclosures. 

Head of the FHFA, Sandra L. Thompson, said, “Allowing more families to qualify for an interest rate reduction will prevent unnecessary foreclosures, help strengthen the Enterprises' books of business, and make sustainable homeownership a reality for more families currently living with the uncertainty of forbearance."

The FHFA plans to continue helping homeowners and the mortgage industry while the world recovers from the pandemic. Homeowners and renters can visit consumerfinance.gov/housing for up-to-date information on their relief options.