Federal Worker Mortgage Forbearance Act
- Bill Number
- S. 3156
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-11-07: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2025-11-19T15:16:35Z
AI-Generated Summary
Purpose
The Federal Worker Mortgage Forbearance Act (S. 3156) aims to protect federal employees and certain contractors from financial hardship during government shutdowns—periods when Congress fails to pass funding bills, known as lapses in appropriations—by allowing them to request temporary pauses (forbearance) on payments for federally backed mortgage loans.
Key Provisions
- Definitions:
- Agency: Any part of the executive, legislative, or judicial branches of the U.S. government.
- Covered individual: Includes federal employees who are furloughed (temporarily laid off) or performing emergency work without pay during a shutdown, as well as contractors who support these employees but are not paid. Excludes those who continue receiving normal pay.
- Covered period: Starts when a shutdown begins for an agency and lasts up to 180 days after it ends.
- Federally backed mortgage loan: Mortgages on homes or condos (1-4 units) backed by government entities like Fannie Mae, Freddie Mac, FHA, VA, or USDA (these are loans insured or guaranteed by the federal government to make homeownership more accessible).
- Forbearance Process:
- Affected individuals can request a 90-day pause on mortgage payments from their loan servicer (the company handling payments) by affirming financial hardship due to the shutdown, regardless of whether payments are already late.
- Servicers must grant the request quickly without unnecessary delays.
- Borrowers can end the forbearance early if needed.
- During forbearance, no extra fees, penalties, or interest beyond the normal scheduled amount can be added.
- After forbearance ends, no lump-sum repayment of missed payments is required; options like repayment plans are implied but not detailed.
- Knowingly lying on a forbearance request is a federal crime under 18 U.S.C. § 1014 (false statements to influence a loan).
- Government agencies must notify affected workers of these rights within 10 days of a shutdown starting.
- Forbearance does not forgive any debt; all missed payments must eventually be addressed.
- Credit Reporting Protections:
- Amends the Fair Credit Reporting Act (FCRA) to require loan servicers to report forbearance periods as "current" on credit reports if the loan was current before, or maintain the prior status without worsening it (e.g., if already late, it stays late but improves if payments resume). This prevents credit damage unless the loan is "charged off" (written off as a loss by the lender).
- Effective Date:
- Applies retroactively as if enacted on September 30, 2025, covering future shutdowns starting after that date.
Significant Changes to Existing Law
- Introduces a new right to forbearance specifically for federal workers during shutdowns, which was not previously mandated for these scenarios.
- Modifies the FCRA (15 U.S.C. § 1681s-2) by adding rules for reporting forbearance due to shutdowns as a protected "accommodation," ensuring it does not harm credit scores in the same way other payment pauses might. This builds on existing FCRA protections for hardships like those during the COVID-19 pandemic but tailors them to government funding lapses.
Potential Impacts
- On Citizens: Provides financial relief to hundreds of thousands of federal workers and contractors (potentially 2-3 million during major shutdowns), reducing risks of foreclosure, eviction, or credit damage during unpaid periods. It promotes housing stability without erasing debt.
- On Government Agencies: Requires agencies to issue timely notices, adding minor administrative burdens but helping retain skilled workers by easing personal financial stress.
- On Mortgage Industry: Servicers must comply promptly, potentially increasing short-term administrative costs but reducing long-term defaults from shutdowns.
- On International Relations: No direct impact, as this is a domestic policy focused on U.S. federal operations.
Main Stakeholders Affected
- Federal Employees and Contractors: Primary beneficiaries, especially those with federally backed mortgages (about 70% of U.S. mortgages), facing income loss during shutdowns.
- Mortgage Servicers and Lenders: Must process requests and adjust reporting, affecting companies like those servicing FHA or VA loans.
- Credit Reporting Agencies: Impacted by new FCRA reporting rules, which could influence how they handle millions of consumer accounts.
- Government Agencies: Responsible for notifications; broader federal workforce stability is indirectly supported.
- Taxpayers: Potential indirect benefits through lower default rates on government-backed loans, though no new spending is authorized.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens consumer protections under housing and credit laws by mandating forbearance without servicer discretion, while adding criminal penalties to deter fraud. The retroactive date ensures coverage for ongoing or recent issues but may raise questions about applying to pre-enactment events.
- Constitutional: Aligns with Congress's power to manage federal appropriations (Article I) and protect government functions, potentially reducing disruptions from shutdowns without infringing on private contract rights (as debt forgiveness is explicitly avoided).
- Political: Addresses recurring criticism of shutdowns' harm to essential workers, promoting bipartisanship on federal employee support; could influence future budget negotiations by highlighting human costs, though it does not resolve underlying funding disputes.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Sen. Alsobrooks, Angela D. [D-MD]
Cosponsors (3)
Sen. Van Hollen, Chris [D-MD], Sen. Kaine, Tim [D-VA], Sen. Warner, Mark R. [D-VA]
Recent Actions
- 2025-11-07: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2025-11-07: Introduced in Senate
Bill Versions
- Federal Worker Mortgage Forbearance Act — issued 2025-11-07 — PDF (8 pages)