![]() These new rule changes would require lenders to “redouble their efforts to work to prevent avoidable foreclosures.” It includes giving borrowers enough time to evaluate their options after forbearance ends, allowing streamlined loan modifications and increasing educational outreach to borrowers so that they’re fully aware of their choices. For some homeowners, that could mean selling their home, while others might opt for a loan modification. That number has dropped significantly, but there are still roughly 2 million borrowers who remain in forbearance in mid-July.Īs the first wave of forbearance plans nears expiration in September, Ginnie Mae’s announcement dovetails with the Consumer Financial Protection Bureau (CFPB) finalizing changes to a rule that will help borrowers transition safely out of forbearance. Housing and policy experts largely support the government’s actions, saying it will help people remain in their homes during and after the pandemic.Īs the pandemic began to hit and unemployment reached 14.8% in April 2020, businesses closed and more than 7.2 million borrowers (about 14% of all mortgage borrowers) enrolled in forbearance programs, according to Black Knight, a data analytics firm. “With agency approval and assuming the pricing offered on these loans is competitive, I expect that lenders will very much add this as an option to help distressed borrowers,” Tassone says. Mike Tassone, chief operating officer of Own Up, an online mortgage marketplace, bets the agencies will approve the new terms and that most lenders will welcome the flexibility. Still, it’s contingent upon approval from the agencies who are part of Ginnie Mae’s loan pools, including the FHA, VA and USDA. This new term option for lenders is expected to be available by October. “Because an extended term up to 40 years can be a powerful tool in reducing monthly payment obligations with the goal of home retention, we have begun work to make this security product available,” said Michael Drayne, Ginnie Mae’s acting executive vice president, in a statement. This would be the lengthiest government-guaranteed, mortgage-backed security (MBS) for lenders offering loan modifications for borrowers who can longer afford their mortgages. The idea is to help people stay in their homes by extending their mortgage up to 40 years, which lowers their monthly payments. Department of Agriculture (USDA) and the Office of Public and Indian Housing (PIH). Department of Veterans Affairs (VA), the U.S. ![]() This is significant since Ginnie Mae backs the loans made through the Federal Housing Administration (FHA), the U.S. Ginnie Mae recently said it would help eligible borrowers transition from forbearance into a loan modification for up to 40 years. But when there are nearly 2 million people still in mortgage forbearance since the government began offering Covid-19 relief roughly 15 months ago, it could mean helping millions of people keep their homes. ![]() Having a mortgage for 40 years might sound like a long time.
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