Photo courtesy of Fannie Mae

Amid concerns new homeowners might suddenly find themselves in dire financial straits as the coronavirus-caused economic disruption rolls on, Fannie Mae and Freddie Mac announced they are changing policy and will buy mortgages in forbearance.

“We are focused on keeping the mortgage market working for current and future homeowners during these challenging times,” Federal Housing Finance Agency 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.”

In a lender letter issued Wednesday Fannie Mae said it will buy purchase and non-cash-out refi mortgages on the secondary market that are no more than one month delinquent when the originating lender submits the loan data in Fannie Maie’s Loan Delivery system. Loans originated between Feb. 1 and May 31 are eligible.

However, Fannie Mae is charging a rate of 500 basis points for loans to first-time homebuyers and 700 basis points for all other loans, meaning banks, credit unions and mortgage companies will face substantially lower returns in exchange for being able to sell the loans on, and so may be reluctant to do so unless they are concerned about exchanging loans on their books for cash.