The Federal Housing Finance Agency has extended Fannie Mae and Freddie Mac's temporary ability to purchase lenient loans through December 31st.
Since its inception in April, there have been several extensions to the policy to keep the genesis going amid a wave of indulgence given to borrowers on government loans by the CARES Act. The new delivery date for the loans is February 28, 2021.
Lower prices on such purchases will persist for the time being, but some advisors feel that the Biden administration may be ready to take action to improve prices.
While a relatively small number of loans may be lenient in the post-closing time but before delivery to the GSEs, it can be quite costly for lenders. This is particularly stressful for smaller players with less financial means.
The FHFA expanded several processing flexibilities by the end of the year to reduce the risks associated with the pandemic amid the resurgence of U.S. infections.
Government-sponsored mortgage leniency rates have been low compared to other types of loans, but the dollar volume of the loans affected is higher and concerns remain that the second wave of infections may cause it to rise further.
The forbearance share of GSE loans was 3.5% in Black Knight's most recent weekly snapshot of his daily forbearance data. By comparison, 9.1% of federal housing department insured or Department of Veterans Affairs guaranteed loans were lenient.
The unpaid principal of GSE forbearance loans is $ 208 billion, compared to $ 190 billion for FHA and VA loans. The GSEs had 990,000 forbearance loans and, in Black Knight's latest report, nearly 1.1 million FHA and VA forbearance loans.