Fannie Mae Announces COVID-19 Payment Deferral

May 13, 2020


Today, in response to the COVID-19 pandemic, Fannie Mae released Lender Letter (LL-2020-07), COVID-19 payment deferral to its single-family servicers, introducing a new workout option specifically designed to help borrowers impacted by a hardship related to COVID-19 return their mortgage to a current status after up to 12 months of missed payments. Designed to be simple and efficient for both servicers and borrowers, this solution is for borrowers who have completed a COVID-19 related forbearance plan or who have a confirmed but resolved COVID-19 financial hardship. COVID-19 payment deferral was jointly developed with Freddie Mac at the direction of FHFA.

While COVID-19 payment deferral is similar to the recently announced payment deferral, we have made several enhancements to assist borrowers who have a COVID-19 related hardship. Key differences include:

  • The borrower has experienced a financial hardship resulting from COVID-19 that impacted their ability to make their monthly mortgage loan payment, which has been resolved.
  • The mortgage loan must have been current or less than 31 days delinquent as of March 1, 2020, the effective date of the National Emergency declaration related to COVID-19.
  • The mortgage loan must be 31 or more days delinquent but less than or equal to 360 days delinquent as of the date of evaluation.
  • Certain eligibility criteria are not applicable, such as time from mortgage loan origination and rolling delinquency parameters.
  • The servicer must defer the delinquent principal and interest payments (P&I) together with any allowable servicing advances paid to third parties as a result of the delinquency into the non-interest-bearing principal balance.

Beginning July 1, 2020, COVID-19 payment deferral will be available for borrowers whose hardships related to COVID-19 have been resolved and who are able to continue making their full monthly contractual payment but cannot afford full reinstatement or a repayment plan to bring their mortgage loan current.

The Lender Letter also provides reduced eligibility criteria for evaluating a borrower with a COVID-19 related hardship for a Fannie Mae Flex Modification.

Learn more about what Fannie Mae is doing in response to the COVID-19 emergency on Our Approach page.