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MReport June 2020

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M R EP O RT | 17 FEATURE COVER STORY SPECIAL REPORT: COVID-19 Provisions Announced For Borrowers in Forbearance Fannie Mae, Freddie Mac announced regulations for those looking to refinance or purchase a home. T he Federal Housing Fi- nancing Agency (FHFA) announced Tuesday that Fannie Mae and Freddie Mac have issued temporary guid- ance regarding the eligibility of bor- rowers in forbearance, or recently ended their forbearance, looking to refinance and purchase a home. Borrowers are eligible to refi- nance or buy a new home if they are current on their mortgage—or in forbearance but continued to make payments or reinstated their mortgage. They are also eligible to refinance or buy a new home three months after their forbear- ance ends and they have made three consecutive payments under their repayment plan, deferral option, loan modification. "Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized," said FHFA Director Mark A. Calabria. "Today's action allows homeowners to access record low mortgage rates and keeps the mortgage market func- tioning as efficiently as possible." The FHFA recently announced it is extending the GSE's previous- ly announced ability to purchase single-family mortgages in forbear- ance. Fannie Mae and Freddie Mac are now able to buy loans in forbearance, with note dates on or before June 30, as long as they are delivered by August 31 and have missed just one mortgage payment. The previous policy was set to expire on May 31. The agency also announced that foreclosure and eviction morato- riums backed by Fannie Mae and Freddie Mac were extended to June 30. Deadlines for that morato- rium were set to expire on May 17. "During this national health emergency, no one should be forced from their home," Calabria said. "Extending the foreclosure and eviction moratoriums protects homeowners and renters with an Enterprise-backed mortgage and provides certainty for families." The FHA announced that it would halt all new foreclo- sure actions and suspend all foreclosure actions currently in process, excluding legally vacant or abandoned properties. Also, the Administration will cease all evictions of persons from FHA- insured Single Family proper- ties, excluding actions to evict occupants of legally vacant or abandoned properties. "We made it clear at the begin- ning of this pandemic that no American should have to worry about losing their home amidst a crisis. Today's announcement ensures that commitment," said U.S. Department of Housing and Urban Development Secretary Dr. Benjamin Carson. "While we have made great strides in fighting this virus, the fact remains that many Americans are still strug- gling as we work diligently to get our economy back on sound foot- ing, which I have full confidence we will do through the leadership of the President." Rising Unemployment Leading to Increased Risks For Homeowners Additional 2.4 million Americans file for unemployment. I n the week ending May 16, the advance figure for season- ally adjusted initial unemploy- ment claims was 2,438,000, a decrease of 249,000 from the previous week's revised level. The previous week's level was revised down by 294,000 from 2,981,000 to 2,687,000. The 4-week moving average was 3,042,000, a decrease of 501,000 from the previous week's revised average. The previ- ous week's average was revised down by 73,500 from 3,616,500 to 3,543,000. The advance seasonally adjusted insured unemployment rate was 17.2% for the week ending May 9, an increase of 1.7 percent- age points from the previous week's revised rate. The previous week's rate was revised down by 0.2 from 15.7% to 15.5%. The advance number for seasonally adjusted insured unemployment during the week ending May 9 was 25,073,000, an increase of 2,525,000 from the previous week's revised level. The previous week's level was revised down by 285,000 from 22,833,000 to 22,548,000. The 4-week mov- ing average was 22,002,250, an increase of 2,313,500 from the previous week's revised average. The previous week's average was revised down by 71,250 from 19,760,000 to 19,688,750. "As with the prior weeks, a few caveats make this week's data difficult to interpret precisely," said Doug Duncan, Chief Economist, Fannie Mae. "On one hand, unem- ployment insurance eligibility rules have been relaxed recently, increas- ing the number of people who are able to apply. This makes it difficult to estimate the uninsured unemployed share of the work- force. On the other hand, many states reported a significant back- log of unemployment insurance applications due to a lack of processing capacity, indicating that this week's release may understate the true extent of insured layoffs." As the coronavirus (COVID-19) pandemic continues to impact the economy, and claims for unemploy- ment insurance reach record highs, homeowners are at an increased risk of becoming delinquent in the coming months. According to Black Knight, some 3.6 million home- owners were past due on their mortgages as of the end of April (including the roughly 211,000 who were in active foreclosure)—the highest number since January 2015.

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