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12.3.4.3.1 Introduction

Significant Law Change

Borrowers facing COVID-19 hardships have access to forbearance. Unlike FHA, the availability of forbearance from Fannie Mae is not time limited because it builds from Fannie Mae’s standard forbearance language. It is important to note that Fannie Mae’s forbearance provisions are not mandatory, and therefore, advocates in disputes with loan servicers should tie their requests to the CARES Act if possible.

Fannie Mae provides for up to a year of forbearance for COVID-19 borrowers in at least two six month periods; however, servicers may offer shorter increments. Unlike its standard forbearance provisions, borrowers with COVID-19 hardships may have access to twelve months of forbearance even if they were previously behind on their loan. As with its standard forbearance plans, borrowers do not need to submit documentation to Fannie Mae to access COVID-19 forbearance. No later than thirty days prior to the expiration of the COVID-19 forbearance, the servicer must reach out to the borrower to discuss workout options. These could include additional forbearance or Fannie Mae’s post-forbearance options.

In addition, no Fannie Mae guidance prevents a person with a COVID-19 hardship who defaults after receiving a final foreclosure alternative from receiving a subsequent forbearance.

In February of 2021, Fannie Mae authorized extended forbearance for borrowers who were in active forbearance plan as of February 28, 2021, and who continue to face COVID-19 related financial hardships. These borrowers are eligible to receive an additional six months of forbearance. According to Fannie Mae Lender Letter 2021-02, “[i]f upon reaching a cumulative forbearance plan term of 12 months as measured from the start date of the initial forbearance plan the servicer determines the borrower’s hardship has not been resolved, the servicer is authorized to grant an extension of the forbearance plan term of up to 3 months, and grant one or more forbearance plan term extensions of up to 3 months.”52 However, the servicer must receive Fannie Mae approval to grant the extended forbearance if it would result in a borrower becoming more than eighteen months delinquency.

Footnotes