The Federal Housing Finance Agency (FHFA) recently announced new help for homeowners struggling to make mortgage payments due to COVID-19-related challenges. As of May 13, Fannie Mae and Freddie Mac are making available a new payment deferral option that allows borrowers who are able to return to making their normal monthly mortgage payment the ability to repay their missed payments at the time the home is sold, refinanced or at maturity.
 
“For homeowners in forbearance due to COVID-19, payment deferral allows them to make up missed forbearance payments when they sell their home or refinance,” said FHFA Director Mark Calabria. “This new forbearance repayment solution responsibly simplifies options for homeowners while providing an additional tool for mortgage servicers. Borrowers who can pay their mortgage should, because missed payments remain an obligation that will ultimately have to be repaid.”
 
In response to the COVID-19 national emergency, borrowers with a financial hardship due to the pandemic have been able to receive forbearance—a pause or reduction in their monthly mortgage payment. While the missed payments will need to be paid back once the forbearance ends, FHFA, Fannie Mae and Freddie Mac do not require a lump-sum repayment at the end of the forbearance. Servicers are required to evaluate borrowers for one of several repayment options, generally referred to as a “hierarchy" of repayment and loan modification options.

Payment deferral is one of the repayment options. Payment deferral takes the missed mortgage payments and puts them into a payment due at the sale or refinancing of the home, or the end of the loan. The borrower's monthly mortgage payment will not change.

Servicers will begin offering the payment deferral repayment option starting July 1, 2020.
In addition to the new payment deferral option, borrowers with COVID-19-related hardships can still utilize other options that include reinstatement, repayment plan or loan modifications based on their individual situations.

Talk to your loan servicer about the best option for your personal situation.