Mortgage financing giants Fannie Mae and Freddie Mac announced that homeowners in forbearance can request payment deferrals and tack any missed payments on to the end of their loan term, without penalty or added interest.

Under forbearance, homeowners are still required to repay any missed payments. But the government-sponsored enterprises made clear in an announcement Wednesday that borrowers do not have to repay them all at once.

Freddie Mac stated that borrowers taking one of its mortgage deferral solutions will be able to eventually resume their monthly mortgage payment to its pre–COVID-19 amount by adding up to 12 months of missed payments—including escrow advances—to the end of the mortgage term. Borrowers will not accrue any extra interest or late fees. Its solution is effective July 1, the date when mortgage servicers will begin to evaluate homeowners with resolved COVID-19–related hardships for eligibility.

“Our main focus continues to be finding new and innovative ways to help borrowers and their families during this pandemic,” says Donna Corley, executive vice president and head of Freddie Mac’s single-family business. “Our payment deferral solution adds another tool to our toolbox to help homeowners pick up where they left off once they’ve recovered from a short-term financial hardship.”

Fannie Mae and Freddie Mac are allowing homeowners affected financially by the COVID-19 pandemic to pause their mortgage payments for up to a full year through forbearance. By the start of May, nearly 4 million homeowners had taken advantage of the government’s or a bank’s mortgage forbearance program, according to data from Black Knight, a mortgage analytics firm.

As Forbearance Confusion Persists, Help Set Owners Straight

Loan servicers are to reach out about 30 days before a borrower’s initial forbearance plan is to end to determine what type of repayment plan is needed.

Fannie Mae says that homeowners will have several options to pay back missed payments, including rolling the payments to the end of their mortgage as well as repaying in full—if they wish to—or setting up a repayment plan to gradually catch up.

Fannie and Freddie also said loan modifications could be possible depending on the borrower’s situation.

The National Association of REALTORS® applauded the Federal Housing Finance Agency’s move to deliver greater certainty to homeowners who need to take forbearance. This move offers “solutions and some much-needed certainty to the millions of U.S. families facing unemployment and unsure how they will cover next month’s bills,” says Vince Malta, NAR’s president. “This flexibility will be invaluable for American consumers as we begin to emerge from this crisis and restart our economy.”

To determine whether a loan is owned by one of the GSEs, visit Fannie’s lookup tool or Freddie Mac’s lookup tool.

Homebuilders want to turn buyers on to new-home construction, and they’re willing to sweeten the pot to do so. More builders reportedly are offering discounts or offering free upgrades—like new appliances—or covering closing costs to attract buyers.

Most of these incentives appear to be targeted at new homes or developments already in the works. “Builders with standing inventory will seek to sell it as quickly as they can,” says Robert Dietz, chief economist with the National Association of Home Builders.

Dietz estimates that builders have about 80,000 completed inventory homes ready for buyers nationwide. He also estimates an extra 540,000 homes in some stage of construction.

Sales of new-homes dropped 9.5% in March compared to a year earlier. Dietz expects new-home sales to continue to slow due to climbing unemployment.

“The market is on pause,” Dietz told realtor.com®. “Incentives will be used to offset prices as we see a surge in unemployment.”

Builders are offering different degrees of incentives. For example, the homebuilder Drees Homes is offering discounts in some locales, such as $1,000 for buyers who sign a contract by the end of May or an extra $5,000 toward closing costs for those who book a tour virtually or in person. They’re also offering in some markets up to $10,000 toward outdoor amenities such as kitchens and entertaining areas.

“Right now, we are just encouraging buyers. We’re still here, and we’re open for business,” Alicia Engelking, marketing director for Drees Homes in Houston, told realtor.com®.

Neals Communities, selling in communities on the west coast of Florida, began offering to waive closing costs for up to $18,000 on 80 of its homes that were finished or are currently under construction.

The builder Kenco is discounting up to $50,000 on some of its completed home inventory priced between $600,000 and $1 million.

Builders like Lennar Corp. and Ryan Homes are reportedly offering $7,500 in closing costs on new homes. Lennar is also offering an extra $5,000 to $10,000 off its selling price in some markets. Its mortgage company is touting 2.7% interest rates on 30-year fixed-rate mortgages for select homes (Freddie Mac reports the national average is 3.26%, for comparison).

In Wellington, Fla., three builders are offering discounts in a planned “agrihood” community accompanying a 5-acre working farm. “It’s a buyer’s opportunity to get a great price,” Susan Moguel, Arden’s marketing director, told realtor.com®.

Despite the pandemic, the majority of tenants are still keeping up with their rent payments. The majority of renter households—80.2%—made a full or partial rental payment for the month of April by May 6, according to the National Multifamily Housing Council. The analysis, which tracked 11.4 million units professionally managed nationwide, reports that the figure is up slightly from 78% of renters who made a payment by April 6.

“Despite the fact that over 20 million people lost their jobs in April, for the second month in a row, we are seeing evidence that apartment renters who pay rent are stepping up and doing so,” says Doug Bibby, NMHC president. “We expect May to largely mirror April, when the payment rate increased throughout the month as financial assistance worked its way to people’s bank accounts.”

Meanwhile, the industry is starting to see the potential for greater opportunity in rental housing, including single-family rental homes. JPMorgan Chase & Co.’s asset management arm more than doubled its size of a joint venture with American Homes 4 Rent, a landlord giant in the single-family rental space. JPMorgan’s Strategic Property Fund partnered with American Homes 4 Rent earlier this year. They increased their joint venture from $250 million to now $625 million. They believe the demand for rental houses will increase due to the pandemic, and they’re providing additional funds for the construction and operation of properties.

American Homes 4 Rent reported that through May 5 it had collected 95% of rent payments from its tenants for April and 82% of its payments for May.

New restrictions on the Economic Injury Disaster Loan program may prompt real estate professionals to look to other funding programs. Responding to the skyrocketing demand and evaporating funding, the Small Business Administration has reduced the size of loans it will issue through the EIDL program. It’s also reportedly limiting remaining funding to agricultural businesses.

This emergency disaster lending program for small businesses is separate from the Paycheck Protection Program, another lifeline that has been distributing funds to help companies stay afloat during financial hardships faced from the COVID-19 pandemic. Real estate professionals are still reportedly accessing PPP loans.

Initially, the EIDL program was granting individual disaster loans for small businesses of up to $2 million. But now the SBA has begun to limit those loans to $150,000, The Washington Post reports. As the agency works its way through a reported backlog of millions of applications over the last several weeks, it is also limiting who can now apply.

“At this time, only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received,” a statement on the SBA website reads.

“The SBA observed the necessity to help farmers recover from the economic downturn caused by the pandemic,” Carol Chastang, an SBA spokeswoman, says.

The EIDL has been a longstanding program within the SBA that often is used during times of crisis by companies. As the program became available in response to the pandemic, the SBA reported several million applications in the first few days it was activated. The EIDL program first ran out of funding in April, but Congress allocated an extra $50 billion for the loans.

Meanwhile, the Paycheck Protection Program is still accepting applications from small businesses. The PPP program, focused on keeping small businesses from laying off employees by offering disaster loans through forgivable loans, has $126.5 billion in funding remaining from its $669 billion total, HousingWire reports. Some banks reportedly have stopped accepting PPP loan applications because they believe they have enough in their pipelines to use up the rest of the funding, Cowen Washington Research Group reports. However, lawmakers urge that applicants try a different lender if one lender denies a loan. More than 5,400 lenders are issuing PPP loans.

Access a list of SBA-approved PPP lenders by state.

The 30-year fixed-rate mortgage inched up slightly this week to average 3.26%, but remains near its record low.

“Mortgage rates stayed at or near record lows for the fifth straight week and homeowners are taking advantage with refinance activity remaining high,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages with mortgage rates for the week ending May 7:

• 30-year fixed-rate mortgages: averaged 3.26%, with an average 0.7 point, rising from last week’s 3.23% average. Last year at this time, 30-year rates averaged 4.10%.
• 15-year fixed-rate mortgages: averaged 2.73%, with an average 0.7 point, falling from last week’s 2.77%. A year ago, 15-year rates averaged 3.57%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.17%, with an average 0.3 point, rising from last week’s 3.14% average. A year ago, 5-year ARMs averaged 3.63%.

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