The Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac, said Monday that it will not require homeowners who take mortgage forbearance due to financial hardship from the COVID-19 pandemic to make up the missed payments in a lump sum.

The FHFA made the announcement after news stories cautioned that homeowners who take forbearance would be on the hook to repay missed payments in a lump sum as soon as their forbearance period ends. Recent stimulus legislation had not clarified the repayment process. Borrowers with Fannie- and Freddie-backed loans who take forbearance will be contacted by their mortgage servicer before the end of their forbearance period to work out repayment options, which may include modifying the loan so the borrower’s payments are added to the end of the mortgage.

So far, more than 3.4 million homeowners—or 6.4% of all U.S. mortgage loans—are now in forbearance, according to data firm Black Knight Financial. In some cases, mortgage servicers have offered forbearance periods of up to a year. “During this national health emergency, no one should be worried about losing their home,” FHFA Director Mark Calabria said in a statement. “While today’s statement only covers Fannie Mae and Freddie Mac, I encourage all mortgage lenders to adopt a similar approach.”

The 30-year fixed-rate mortgage averaged 3.33% this week, near its all-time low, Freddie Mac reports.

“Mortgage rates have stabilized over the last few weeks as the market searches for direction in the fog of economic data,” says Sam Khater, Freddie Mac’s chief economist. “While financial markets initially rallied on the news of Federal Reserve support and are improving due to the Senate’s passage of a new small business stimulus, we continue to see a deep economic contraction amidst uncertainty about the recovery formation.”

Freddie Mac reports the following national averages with mortgage rates for the week ending April 23:

• 30-year fixed-rate mortgages: averaged 3.33%, with an average 0.7 point, rising slightly from last week’s 3.31% average. Last year at this time, 30-year rates averaged 4.20%.
• 15-year fixed-rate mortgages: averaged 2.86%, with an average 0.7 point, up from last week’s 2.80% average. A year ago, 15-year rates averaged 3.64%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.28%, with an average 0.3 point, dropping from last week’s 3.34% average. A year ago, 5-year ARMs averaged 3.77%.

Freddie Mac reports average commitment rates along with average fees and points to reflect the total upfront costs of obtaining the mortgage.

Some borrowers who’ve obtained a mortgage are going into forbearance before the loan can be sold by the lender to a government-sponsored enterprise. As a result, the Federal Housing Finance Agency announced Wednesday that for a limited time it will be directing mortgage financing giants Fannie Mae and Freddie Mac (the enterprises) to purchase home loans that have gone into forbearance shortly after closing. The agency says it hopes this step will get the mortgage market moving and help ease home lending as a wave of mortgages fall into forbearance due to the COVID-19 pandemic.

“We are focused on keeping the mortgage market working for current and future homeowners during these challenging times,” FHFA Director Mark Calabria said in a statement. “Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending.”

Banks have been requesting servicing relief and have tightened underwriting standards for new mortgages as more than 3 million loans have fallen into forbearance due to the pandemic. But when homeowners suspend their mortgage payments, servicers are still on the hook for making tens of billions in payments to bondholders. As such, banks have begun tightening underwriting standards. For example, JP Morgan Chase, the nation’s largest lender by assets, last week announced that the majority of new customers applying for a mortgage will need a minimum credit score of 700 and down payment of at least 20% of the home’s value.

Under Wednesday’s announcement, the GSEs will buy loans—for home purchase or refinancing—that go into forbearance within one month after the loan closing. The banks, however, will have to pay 5% to 7% of the loan’s value to sell the loan in forbearance to the GSEs. For a $200,000 loan to a first-time buyer, that could mean the lender will have to pay $10,000 to sell the loan. Some banks could lose money on the loan, but they’ll have to weigh whether they want to hold a delinquent loan in their portfolios.

“The FHFA has identified one of several issues impacting liquidity in the market, and NAR appreciates its efforts on that front, but the FHFA’s actions do not solve the problems hurting average American home buyers and the economy,” says NAR President Vince Malta. “We urge the agency and Director Calabria to continue working toward a solution that will protect American home buyers and our nation’s economic recovery efforts.”

In the past, Fannie Mae and Freddie Mac have not purchased loans in forbearance, since they consider them delinquent. However, the enterprises are chartered by Congress and tasked with maintaining liquidity in the market for real estate investments.

In order for a loan to be eligible under Fannie Mae and Freddie Mac’s new buyback program, the mortgage loan must have closed on or after Feb. 1 and before May 31. The loan must be a mortgage purchase transaction or a no-cash-out refinance. The loan cannot be more than 30 days delinquent.

To help ease lending during this time, the National Association of REALTORS®, along with other housing and banking industry groups, has been calling on financial regulators to create a liquidity facility set up by the Federal Reserve and backed by the U.S. Treasury. The liquidity facility would provide a pool of money that servicers could use to make short-term loans and help ensure the stability of the housing finance market. NAR issued a letter to the Treasury Department on March 27 pushing for greater relief in mortgage servicing.

Prior to COVID-19, coworking office spaces were surging in popularity. Rob Speyer, CEO of the commercial firm Tishman Speyer even called the sector the “biggest disruption to real estate since the invention of the elevator.”

Coworking has been a way for business owners and independent contractors to share space and cut costs. But as the outbreak spreads, the configuration of offices is being rethought.

Coworking companies like We Co. and WeWork are trying to restructure leases as demand for office space begins to shift. For most coworking companies, their business model relies on leasing spaces from landlords long-term and then subletting the space to office users under flexible terms. They tend to make more money by packing more customers on to each floor.

Even Before COVID, Businesses Rethink Open Office Concept

But under new social distancing norms, that business model may be more challenging. The commercial industry is already realizing that demand for open office layouts and densely packed offices could shift as workers return. WeWork said last week that it was “evaluating how our full-floor layouts can function to support distancing.”

Nevertheless, demand for furnished office space under short-term deals isn’t likely to disappear. “As more companies eschew long-term leases, adopt flexible schedules and let employees work from home, the flexibility of a coworking membership could become more appealing,” The Wall Street Journal reports.

As such, more coworking companies may switch from leases to revenue-sharing arrangements with landlords. They believe that could protect them better in any future downturns as that type of arrangement provides co-working companies greater financial flexibility.