The California Military Families Financial Relief Act (the “Act”) offers protections to military reserve personnel, independent of SCRA benefits. Qualifying members of the United States Military Reserve and National Guard in the state of California who are called to active duty may request a temporary deferment of their mortgage payments.
Ginnie Mae (GNMA) has advised that with respect to the monthly remittance, they do not acknowledge deferments under state military benefits. GNMA requires full remittance, even if a loan has been approved for a deferment under state requirements. The MBA has raised this concern in an effort to work with GNMA for a possible solution.
In order to comply with the Act while abiding by GNMA guidelines, Cenlar currently advances the full amount of principal and interest due during the deferment period. We then look to recapture this total amount of both principal and interest from the mortgagor in the event of an early payoff.
Because section 409.3(d)(1) of the Act states in part, “interest shall not be charged or accumulated on the principal or interest on which the payment was delayed,” Cenlar does not charge the mortgagor for the interest that would have been assessed during the deferment period in the event of an early payoff.
Please be aware for GNMA accounts that are setup with a deferment under the Act, the interest that is passed through to GNMA during the deferment period will remain at the original note rate. GNMA will not issue a reimbursement for the interest differential. In the event of an early payoff, we will only recapture the principal portion of the borrower’s payments during the deferment period. As a result, you will be charged for the loss of the interest differential for Ginnie Mae loans that are setup with an interest deferment.