Fannie Mae will allow borrowers to skip up to six months of payments in these circumstances: if a spouse is injured or killed in military duty, or if they are forced to vacate a home to replace defective drywall.
While issues related to deaths and injuries from military service have grown in recent years, Fannie Mae’s new policy, which took effect on Aug. 1, was initially spurred by the drywall problems. (Freddie Mac put similar policies in place in June.)
Some builders that used drywall imported from China have received complaints from homeowners that the product has rotted pipes and wires, caused respiratory issues and other health problems and emitted an odor of rotten eggs. Subsequent government studies have confirmed a problem, and the Consumer Product Safety Commission Web site has information about this issue at
The vast majority of the complaints have come from homeowners in the hurricane-ravaged Gulf Coast region.
Homeowners who experience problems with drywall must often leave their homes for months at a time while it is replaced. Though the issue is covered by homeowners’ insurance, some owners face difficulties paying their mortgage while also incurring additional costs for temporary housing.
Previously, borrowers could reach out to their mortgage servicer, to whom the monthly payments are sent, which in turn could seek Fannie Mae’s permission to allow the borrower to skip payments and often add the missed payments to the end of the mortgage term.
The new Fannie Mae policy formalizes this approach, giving servicers the authority to grant forbearance for up to six months and instructing them to inform credit agencies that the borrower is not delinquent.
Gwen Muse-Evans, the vice president for enterprise risk policy at Fannie Mae, said that borrowers who fall into the “unique hardship” category could not simply stop making mortgage payments. They must obtain written permission from their servicer and offer details about the problems they face through bills or other documents, she said.
Only about half of borrowers who face hardship of any kind will inform their servicer, Ms. Muse-Evans added, even though there are many programs from the government and lenders to help avoid foreclosure.
But foreclosure-avoidance counselors say that borrowers must sometimes wait months before getting a response from servicers, who have been overwhelmed by a growing number of defaulted loans.
Ms. Evans, meanwhile, said that Fannie Mae had made it a priority this year to increase the response rate of servicers, with whom Fannie Mae has contractual agreements.
She acknowledged that in the meantime even those borrowers who might otherwise qualify for Fannie Mae’s new program but who stop paying their mortgage bill on their own could face the same financial consequences as others — namely, foreclosure actions from lenders and credit score penalties that greatly limit the borrower’s access to loans, while increasing the cost of those loans.
A version of this article appeared in print on August 1, 2010, on page RE6 of the New York edition.
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