Fannie and Freddie will start buying riskier mortgage loans to ease rising housing-market stress | Markets Insider

Wednesday that Fannie Mae and Freddie Mac will ease rules for mortgage servicers and buy up loans that slipped into forbearance.

Fannie and Freddie previously avoided such loans, but the coronavirus' broad economic impact and hit to the US housing sector placed a considerable strain on the key lending market. The policy change will allow Fannie and Freddie to alleviate some credit stresses and temporarily buy the mortgages, according to FHFA.

The government's $2 trillion relief package allowed all homeowners with federally backed mortgages to be eligible for up to one year of forbearance. The FHFA rule change will lift lending limits for firms as more Americans are likely to request deferred payments.

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Sadly, Fannie/Freddie is reducing the price they pay servicers to take their loans in forbearance severely. This will be a last chance option, for servicers who will otherwise go defunct.

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