Removing Barriers Blog

FHFA Announces 4-Month Advance Obligation Limit
Posted April 21, 2020 by CUNA Advocacy

The FHFA announced the alignment of Fannie Mae's and Freddie Mac's policies regarding servicer obligations to advance scheduled monthly principal and interest payments for single-family mortgage loans. Once a servicer has advanced four months of missed payments on a loan, it will have no further obligation to advance scheduled payments.  

This limit applies to all Enterprise servicers regardless of type or size.  

The intent of the policy is to provide mortgage servicers the ability to plan for exactly how long they will need to advance principal and interest payments on loans for which borrowers have not made their monthly payment.

The FHFA is also instructing the Enterprises to maintain loans in COVID-19 payment forbearance plans in Mortgage Backed Security (MBS) pools for at least the duration of the forbearance plan. This action clarifies that mortgage loans with COVID-19 payment forbearance shall be treated like a natural disaster event and will remain in the MBS pool.