Payment Deferral Solutions
Overview
Payment deferral is a servicing relief and loss mitigation solution designed to resolve delinquencies and help homeowners remain in their homes. Payment deferrals address a unique hardship situation – homeowners with a resolved short-term hardship who are financially capable of resuming their previous mortgage payments, but who are unable to reinstate their mortgage or afford a repayment plan.
On March 29, 2023, the Single-Family Seller/Servicer Guide (Guide) Bulletin 2023-8 announced an expansion to the Payment Deferral Program. Under the expanded criteria, payment deferrals are available to eligible homeowners who are between 60-180 days delinquent; however, homeowners who are 30 days delinquent are ineligible. In addition, borrowers are no longer required to make consecutive monthly payments prior to completing a payment deferral. The mandatory effective date for these changes was October 1, 2023.
Workout Prospector® has not been updated with the new criteria. Servicers who are not yet using Resolve® can continue offering and settling pre-expanded payment deferral terms through Workout Prospector until they transition to Resolve®.
Freddie Mac will monitor Servicers’ requests for approving, offering and settling workouts that don’t align with program parameters (pre-expanded or expanded Payment Deferral Program terms). As a reminder, all quality assurance (QA) and related remedies still apply (e.g., Guide Section 3501.1(Opens a new window)).
Payment Deferral Programs
Freddie Mac offers three payment deferral solutions
- Payment Deferral
- COVID-19 Payment Deferral
- Disaster Payment Deferral
Each Payment Deferral solution shares the following requirements:
- A homeowner’s hardship has been resolved.
- A repayment plan or full reinstatement of the mortgage is not a viable option to cure the delinquency.
- Quality Right Party Contact (QRPC) has been established.
- The homeowner has the financial capacity to continue making the existing contractual monthly mortgage payment and does not require a payment reduction.
Key Differences Between Payment Deferral Plans
| Payment Deferral | COVID-19 Payment Deferral | Disaster Payment Deferral | Payment Deferral (Available as of July 1, 2023) |
|
|---|---|---|---|---|
| Evaluations must begin | January 1, 2021 | July 1, 2020 | October 1, 2020 | October 1, 2023 |
| Hardship | Eligible short-term hardship that has since been resolved | COVID-19 related hardship that has since been resolved | Disaster related hardship that has since been resolved | Eligible short-term hardship that has since been resolved |
| Deferral term | 2 months of deferred payment | Up to 18 months of deferred payment | Up to 12 months of deferred payment | Up to 12 months of deferred principal and interest payments, including deferred amounts from previous non-disaster-related payment deferrals |
| Borrower eligibility | Borrower must be 30- or 60- days delinquent and have made, at minimum, two consecutive monthly payments, resulting in the delinquency status remaining unchanged for at least three consecutive months. | Current or less than 2 months delinquent as of March 1, 2020, the effective date of the National Emergency declaration related to COVID-19, and be equal to or greater than one month but less than or equal to 18 months delinquent as of the date of evaluation. | Borrower must have been current or less than 60 days (i.e. less than two months) delinquent as of the date of the disaster. | Borrower must be at least 60 days delinquent but less than or equal to 180 days delinquent as of the evaluation date. |
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| Learn more | Guide Bulletin 2021-8 COVID-19 Servicing: Guidance for Helping Impacted Borrowers | Guide Bulletin 2020-28 Guide Section 9203.26 Disaster Relief | Guide Bulletin 2023-8 | |