New Freddie Mac data finds education and outreach are working, as 96 percent of Freddie Mac borrowers falling behind on their mortgage payments during the Pandemic have enrolled in forbearance, including 97.6 percent of Freddie Mac minority borrowers.
As the COVID-19 pandemic continues to cause unprecedented economic hardship for millions of Americans, Freddie Mac has worked closely with our servicers to provide affected homeowners with options to stay in their homes. We have done so largely using forbearance, which temporarily suspends or reduces a homeowner’s mortgage payment without penalty so they can get back on their feet.
While forbearance is our most effective tool to mitigate a COVID-19 hardship, it’s only useful if people enroll in the program. We have taken a number of actions to ensure Freddie Mac borrowers, industry professionals and the general public are aware of this option. We provided robust materials to our servicers to support their communications with borrowers. We also implemented multiple education campaigns and consumer supports to reach borrowers in need, with a particular focus on geographic areas with high concentrations of Freddie Mac-backed loans and areas where COVID was most prevalent. Moreover, we have put all this information online to increase understanding and awareness. To date, these resources have been used by more than 15 million consumers.
In addition to these efforts, we have continuously monitored our own relief programs to ensure we are doing the best we can in supporting borrowers who are struggling. To this end, today Freddie Mac released new data showing our efforts around forbearance are working nationally and across every ethnic group.
Our data show that 96.1% of borrowers with a Freddie Mac-backed loan who have fallen more than 60 days behind on their mortgage payments during the COVID-19 National Emergency period (March-August) have enrolled in a forbearance plan. This percentage is even higher across all minority populations, where a collective 97.6 percent of Freddie Mac minority borrowers who have fallen behind at least 60 days during the COVID-19 period have enrolled in forbearance. Notably, forbearance rates among nearly all individual minority groups (Hispanic, African American, Asian) are higher than among non-Hispanic white borrowers (97.7%, 96.5%, and 98.4%, respectively).
This data demonstrates that the vast majority of borrowers who have fallen behind during the COVID-19 period have accessed the mortgage relief that they needed through Freddie Mac’s forbearance program. The multi-year work conducted by Freddie Mac, Fannie Mae, and the Federal Housing Finance Agency to align servicing programs definitively illustrates that the GSE forbearance programs, coupled with the relief provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act has been overwhelmingly successful in reaching borrowers with Freddie Mac-backed mortgages who are most in need at this challenging time.
Determining this percentage required detailed data analysis by Freddie Mac to ensure we included only those who were falling behind during the COVID-19 period, and therefore likely eligible for COVID-related forbearance. Not all borrowers who fell behind on their mortgage during the pandemic did so as a result of COVID-19, though we estimate that this is the case for a significant majority who have gone more than two months delinquent during this time. Therefore, we limited our data analysis to only include those borrowers who began facing hardship after the pandemic began, as well as only those went 60+ days behind on their payments. To do so, we followed a two-pronged approach:
First, we excluded from our analysis loans that were in delinquency before the pandemic hit. These individuals faced hardship or unique circumstances for other reasons. The loans analyzed for these purposes were all current as of the end of February 2020.
Second, of the subset of borrowers identified as current as of the end of February 2020, we further analyzed those borrowers who went 60+ days delinquent, after that time, i.e. 60 or more days late on their mortgage payment. We did not include borrowers who are only 30 days late on their payment, because each month, Freddie Mac consistently experiences an appreciable portion of loans in our book of business that become 30-days delinquent but are subsequently brought current by the borrowers themselves without intervention. Falling behind by one month can often be caused by a change in job, emergency medical bill or another temporary financial issue. While these factors can impact a homeowner’s ability to make a mortgage payment, they are not necessarily indicative of their inability to consistently pay their mortgage longer term.
Finally, we analyzed the subset of borrowers who went 60+ days delinquent who were ever in a forbearance plan during the March – August timeframe, the total of which is 96.1%.
Freddie Mac is indeed making progress in reaching those impacted by COVID-19, but we are certainly not declaring victory. Even as reports confirm that the number of homeowners in a forbearance from Freddie Mac or Fannie Mae has declined over the last several months, millions continue to face economic uncertainty and hardship.
That’s why in addition to doing all we can to continue to help those homeowners get into a forbearance plan, Freddie Mac has a number of post-forbearance options to ensure that once owners get back on their feet, they can enter a plan that is best for them to repay the money they owe. This includes options to enroll in a repayment plan, resume making their regular monthly payments, or lower their monthly payment, among others.
In addition, if you are or know someone who is a borrower facing hardship, please consider some of our tools that can help:
The COVID-19 pandemic has highlighted Freddie Mac's role of providing stability and liquidity to the housing market and the important role we play in a time of crisis. We're proud of how quickly we worked to provide support to homeowners facing financial difficulty as a result of the pandemic. And we're committed to doing so until this crisis is over.