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Significant Law Change

Borrowers with Freddie Mac loans are entitled to forbearance for COVID-19 hardships. As with its standard forbearance plans, borrowers do not need to submit documentation to receive COVID-19 forbearance.68 Freddie Mac explicitly allows servicers to provide the 360 days of forbearance in more than two increments.69 “[A]n eligible Borrower may be given an initial forbearance plan for up to 180 days, and thereafter one or more forbearance plan term extensions, provided the total forbearance terms do not exceed 12 months.”70 According to Freddie Mac, the servicer must provide the borrower with the length of forbearance the borrower requests: “If the Servicer and Borrower cannot agree on the length of the forbearance plan, then the Servicer must offer the forbearance plan term length requested by the Borrower, not to exceed 180 days”71

No later than thirty days prior to the expiration of the CARES Act forbearance, the servicer must reach out to the borrower to discuss workout options.72

Freddie Mac’s COVID-19 forbearance guidance does not have an expiration, and adjustments to its standard forbearance provisions are connected to COVID-19 hardships and not the CARES Act and its covered period. While there are some of Freddie Mac’s specific guidance suggest discretion to the servicer in granting forbearance, it also says that the “length of each forbearance plan term must be for an appropriate length, based on the Borrower’s individual circumstances and nature of the hardship, and must be agreed upon with or requested by the Borrower.”73 In addition, no Freddie Mac 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, Freddie Mac 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 Freddie Mac Bulletin 2021-8, “[o]nce the Borrower reaches a cumulative term of 12 months of forbearance, the Servicer is authorized to grant an eligible Borrower a forbearance plan term extension of up to 3 months and thereafter one or more forbearance plan term extensions of no more than 3 months each, provided the plan term does not exceed 18 months of total delinquency or a cumulative term of 18 months, whichever is shorter.”74 Importantly, as reflected in the Bulletin guidance, pre-hardship default impacts borrowers’ ability to obtain extended forbearance. The standard COVID-19 forbearance provisions, to the contrary, provide forbearance terms without regard to the borrowers’ previous delinquency. Additionally, the servicer must attempt to make QRPC at least thirty days in advance of any forbearance extension.