Fannie Mae Mortgage Note: Grace Period Explained

During the COVID-19 pandemic, Fannie Mae offered flexibilities for homeowners facing financial hardship. These included suspending foreclosures and evictions, extending eviction protections to renters, and reminding homeowners that they are not required to repay missed payments during a forbearance period all at once. However, it is unclear whether a grace period is provided for a Fannie Mae mortgage note. A grace period is the time after the due date during which a borrower can make a payment without incurring a penalty. For most mortgages, this is 15 days.

Grace period for late mortgage payments

A grace period is the set time after your due date during which you can still make a payment without incurring a penalty. Most mortgage payments are due on the first of the month, and most mortgage servicers won't give you a late payment penalty after only a day late because of the mortgage grace period. For most mortgages, the grace period is 15 calendar days. This means that if your mortgage payment is due on the first of the month, you have until the 16th to make the payment.

Your grace period typically ends after 15 days. At this point, your lender may assess a late fee for payment due, which can be charged each month you miss a payment. These payments can be significant, generally ranging between 4% and 5% of the total overdue balance. Your lender will likely report your late payment to the three major credit bureaus after 30 days past due, and your credit score will take a hit. Even one late payment can negatively affect your credit score for up to three years, according to FICO. The effects of late payments can vary, depending on your overall financial history and each credit bureau's means of calculating your score.

During the COVID-19 pandemic, Fannie Mae took a number of actions to help homeowners and renters facing financial hardship. These included suspending foreclosures and evictions, extending eviction protections to multifamily renters when the property owner received a forbearance, reminding homeowners that they are never required to repay missed payments during a forbearance period all at once, and announcing a new COVID-19 payment deferral option. There was also no waiting period for borrowers who requested forbearance due to a COVID-19 financial hardship but ultimately made all their payments in full and on time.

Fannie Mae publishes state-specific fixed-rate notes for ten jurisdictions, although they are not available for all products. The multistate note can be used in most jurisdictions unless the security property is located in a jurisdiction for which Fannie Mae publishes a state-specific mortgage note.

Fannie Mae's COVID-19 forbearance plan

The COVID-19 pandemic caused financial hardship for many Americans, and Fannie Mae responded by offering a forbearance plan to help homeowners and renters. The forbearance plan is an agreement between the homeowner and their mortgage servicer to establish an alternative payment schedule to reduce or suspend payments for a period of time. Importantly, mortgage forbearance plans do not reduce the principal amount owed on a mortgage, and interest continues to accrue for the duration of the plan.

Fannie Mae also announced a temporary moratorium on foreclosures and evictions for properties with single-family mortgages backed by them. This moratorium was extended multiple times during the pandemic, with the last extension announced on August 27, 2020, pushing the moratorium until December 31, 2020. This moratorium applied only to homes owned by Fannie Mae and did not include tenants in homes that had not been foreclosed.

Additionally, Fannie Mae offered support to renters living in properties financed by them through the Disaster Response Network. Renters had access to housing counselors with expertise in rental assistance programs and other financial support programs.

Once the forbearance plan ends, the homeowner must work with the mortgage servicer to determine how they will repay the missed payments. Homeowners who can afford to return to regular mortgage payments but cannot pay back the delayed payments all at once can request a repayment plan. This allows them to pay back the delayed payments in increments added to their regular monthly mortgage payments. Another option is the COVID-19 Payment Deferral, which allows homeowners to defer missed payments and associated taxes/insurance premiums to the maturity date of the loan.

Mortgage note and security instrument

A mortgage note is a legal document that defines the terms of a loan for both the borrower and the lender. It is held by the mortgage provider and includes details such as the monthly payment amount, loan terms, and any penalties that may be incurred. The mortgage note is signed at the end of the home closing and becomes legally binding once signed by both parties. It is important to ensure that the mortgage note and all other legal documents are accurate.

A mortgage note is often accompanied by a promissory note, which outlines the terms of repayment to the lending institution. This includes financial details such as the interest rate and method of payment. In the case of a default, the promissory note provides a procedure that will be followed.

During the COVID-19 pandemic, Fannie Mae offered support to both lenders and borrowers by suspending foreclosures and evictions, extending eviction protections, and providing a payment deferral option. There was no waiting period for borrowers who missed payments due to financial hardship but were able to reinstate their loans by repaying the full amount of the outstanding payments.

A security instrument is a document that gives the lender the legal right to seize collateral, usually the property itself, when the borrower defaults on their loan. It secures the promissory note and gives the holder a legal claim to the collateral. Security instruments are legally binding and include mortgages and deeds of trust. Mortgages allow the lender to take possession and sell the property if necessary, while deeds of trust involve transferring the title to a neutral third party (trustee) who holds it for the lender's benefit.

Fannie Mae's eligibility requirements

Fannie Mae is a nickname for the Federal National Mortgage Association (FNMA). It is a government-sponsored enterprise that provides lenders with cash to fund home loans at affordable mortgage rates. Lenders use the cash raised by selling mortgages to Fannie Mae to fund new loans, which adds stability to the U.S. mortgage market.

Fannie Mae mortgages are the most common type of mortgage for buying or refinancing a home. The eligibility requirements for a Fannie Mae mortgage are as follows:

• A minimum credit score of 620 is required for a conventional mortgage. A higher credit score will qualify you for better mortgage rates and lower private mortgage insurance (PMI) premiums.
• A down payment of at least 3% is needed for Fannie Mae's HomeReady® and standard loan programs for a single-family home, as long as it's a primary residence.
• You will need to wait up to seven years after a foreclosure to take out a conventional loan. A Chapter 7 bankruptcy will require a four-year waiting period before you can qualify.
• The HomeReady loan is the only Fannie Mae loan program with income limits. Check the limits in your area to see if you're eligible.
• The Federal Housing Finance Agency (FHFA) sets conforming loan limits each year based on changes in average home prices. As of 2025, the maximum conforming Fannie Mae loan limit is $806,500 for a single-family home in most parts of the country.
• Mortgages with higher limits, called “high-balance loans,” are available in higher-cost areas of the country.
• You will generally pay between $300 to $500 for a home appraisal on a purchase. In some cases, Fannie Mae may allow for a property inspection waiver (PIW).

During the COVID-19 pandemic, Fannie Mae took several actions to help homeowners and renters facing financial hardship. This included suspending foreclosures and evictions, extending eviction protections to multifamily renters, and reminding homeowners that they are not required to repay missed payments during a forbearance period all at once. There was also no waiting period for borrowers who requested forbearance due to COVID-19 financial hardship but were ultimately able to make all their payments in full and on time.

Fannie Mae's state-specific documents

Fannie Mae is a nickname for the Federal National Mortgage Association (FNMA). It is a government-sponsored enterprise that provides lenders with cash to fund home loans at affordable mortgage rates. Lenders use the cash raised by selling mortgages to Fannie Mae to fund new loans, adding stability to the U.S. mortgage market.

Fannie Mae mortgages are the most common type of mortgage for buying or refinancing a home. The mortgages are available for both single-family and multifamily homes. The minimum credit score for a conventional mortgage is 620, but you may need a higher down payment and less debt to qualify. A down payment of at least 3% is required for Fannie Mae's HomeReady® and standard loan programs for a single-family home, as long as it's a primary residence.

Fannie Mae has taken several actions to help homeowners and renters facing financial hardship due to COVID-19. They suspended foreclosures and evictions, extended eviction protections to multifamily renters, and reminded homeowners that they are never required to repay missed payments during a forbearance period all at once. They also announced a new COVID-19 payment deferral option and provided flexibility for refinance and home purchase eligibility.

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