In April, Fannie Mae and Freddie Mac’s loan terms modifications reached over 5,000 – the first time the two government home refinancers are recording this high number of mortgage modifications since the pandemic peaked in the first quarter of 2020.
Financial Hardships Responsible for the Loan Modifications
Considering the financial hardships homeowners face with their monthly mortgage payments due to the pandemic, government refinancers Fannie Mae and Freddie Mac decided to modify their loans to avoid foreclosure. The figure is proof that the two bodies are trying to prevent these incapable homeowners from losing their precious homes.
The FHFA reported that the number of mortgage loan modifications increased to 5,271 in April compared to 4,849 modifications recorded in the same month in 2020. March 2020 was the last time loan modifications were this high when they climbed to 5,570.
Loan Modification Will Help Borrowers In Forbearance
Certainly, the several loan modifications by the two primary players in the house financing niche show the vision they have for homeownership in America. Loan modifications are key to keeping the homes of these distressed mortgage defaulters, including those in forbearance. They will also encourage several first-time homebuyers to join the clique in homeownership.
These loan modifications mean that borrowers can now make flexible payments to cover their outstanding or pending mortgages. Thanks to the new policy, homeowners can allay those fears of losing their homes when the foreclosure moratorium ends on July 31st, 2021.
Homeownership has been one of the biggest problems of low and middle-income earners, with home prices rising above their incomes. The pandemic made it worse for several employees with mortgage plans, as they lost their jobs, resulting in the opting for forbearance to avoid foreclosure. Thankfully, the job market is becoming more stable, with June reports suggesting that the country is gradually overcoming the “dark era” caused by the Covid.
Mortgage applications have also risen in volume due to the low rates and refinance after two weeks of reaching bottom levels. It is a strong indication of greater things to come in the housing market for homebuyers and the economy generally.
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Published by Eric Lawrence Frazier MBA.