Federal Worker Mortgage Forbearance Act Grants 90-Day Payment Pause During Shutdowns, Protects Credit Scores

When the government shuts down, it’s not just a headline; it’s a paycheck disappearing for hundreds of thousands of federal employees and contractors. The Federal Worker Mortgage Forbearance Act is designed to act as a financial emergency brake for these folks. Simply put, this legislation gives federal employees and certain contractors the right to request a 90-day pause on their federally backed mortgage payments if their agency experiences a lapse in appropriations (a shutdown).

To qualify, you must be a “covered individual”—meaning you’re an employee or contractor whose job supports an employee, and crucially, you don’t receive your normal basic pay during the lapse. You just have to affirm that you’re experiencing financial hardship because of the shutdown, and your loan servicer must grant the forbearance promptly. This is a big deal because it removes the guesswork and negotiation from an already stressful situation.

No Penalty Zone: Interest, Fees, and Credit

This bill doesn’t just stop the clock; it prevents financial damage. For anyone who has ever dealt with a forbearance, the biggest fear is the lump-sum payment demand afterward and the hit to your credit score. This bill addresses both head-on.

First, during the 90-day forbearance period, no fees, penalties, or extra interest can accrue beyond what was already scheduled. This means you aren't penalized financially for the government’s failure to pass a budget. Second, when the forbearance ends, the servicer cannot require you to pay all the missed payments in one giant lump sum. This is critical for preventing a temporary cash-flow problem from turning into a permanent foreclosure threat.

Perhaps the most protective part of this bill is how it handles credit reporting. It amends the Fair Credit Reporting Act to require servicers to report the account as current if the borrower meets the terms of the forbearance. Even if your account was delinquent before the shutdown, if you bring it current during the accommodation period, the servicer must report it as current. This means a shutdown won't tank the credit score of a federal worker who owns a home, protecting their ability to borrow for years to come. This is a massive shield against the long-term, invisible damage that temporary income loss can cause.

The Real-World Check

Think about a single parent working as an administrative assistant at the USDA (a covered agency). When a shutdown hits, their income stops. Without this bill, they would have to beg their mortgage company for relief, potentially incur late fees, and risk a credit score drop. Under this Act, they simply request the forbearance, affirm their hardship, and get 90 days of breathing room without worrying about their credit or a massive bill coming due the minute the government reopens.

However, it’s important to note the administrative shift. While this is a clear win for homeowners, it does place the immediate burden of delayed payments onto mortgage servicers, and ultimately, the federal entities that back those loans (like Fannie Mae, Freddie Mac, FHA, and VA). They have to manage the paperwork and the temporary loss of principal and interest payments. The bill is clear, though: knowingly making a false statement to get this forbearance is a federal crime, which provides a strong deterrent against misuse.

Finally, the bill requires the head of the relevant agency to notify covered individuals of their rights within 10 days of a shutdown starting. This ensures that the people who need this lifeline actually know it exists, turning a dense piece of legislation into actionable relief during a crisis.