Facing an unknown but undoubtedly large number of homeowners and commercial mortgage borrowers needing forbearance thanks to the coronavirus-caused economic crisis, a coalition of the mortgage and housing industry’s biggest trade groups is asking the federal government for help.
The 15-member coalition, which includes the Mortgage Bankers Association, the National Association of Realtors and the National Association of Home Builders, is asking government regulators to set up a liquidity facility for mortgage servicers who wind up with large numbers of mortgages in forbearance but without enough cash on hand to fulfill their obligations to mortgage holders.
Under the terms of the CARES Act and administrative actions announced by the Federal Housing Finance Agency and taken by Fannie Mae and Freddie Mac in March, both homeowners and owners of multifamily buildings with mortgages backed by either GSE can put those mortgages into forbearance if they face financial difficulty due to the pandemic. To receive forbearance, multifamily property owners must also suspend all evictions for renters unable to pay rent due to the impact of the coronavirus.
Connecticut regulators have urged lenders to support their borrowers during the crisis.
Around 10 million Americans have filed for unemployment in the last two weeks, showing the sheer scale of the economic crisis facing the nation.
While many banks and credit unions service mortgages they may have originated but sold onto the secondary market, many servicers are non-depository financial institutions, and so have less money on hand to continue forwarding payments to mortgage holders while payments from mortgagees decline. Many banks have said capital requirements set under Dodd-Frank have left them with significant reserves to weather this crisis.
“Policymakers rightly chose to respond, but made mortgage servicers responsible for delivering these government-mandated benefits, and the industry is prepared to supply that relief,” a statement from the coalition released Saturday said. “The established forbearance framework is appropriate, as it gets help to the most people as quickly as possible. But the scale of this forbearance program could not have been foreseen by mortgage servicers, or fully anticipated by regulators.”
The coalition said a recent announcement by Ginne Mae that it would establish a liquidity facility to support single- and multifamily mortgage forbearance “is appreciated.”
“However, it will not address servicing advances associated with loans backing Fannie Mae, Freddie Mac, or private-label securities, nor will it address advances of taxes and insurance on loans backing Ginnie Mae securities,” the statement said. “Any further delay could lead to greater uncertainty and volatility in the market. The undersigned organizations strongly urge the Treasury Department, the Federal Reserve and FHFA to establish a strong, reliable source of liquidity for mortgage forbearance – and to do so quickly.”
Chairman of the Senate Committee on Banking, Housing, and Urban Affairs Sen.Mike Crapo, R-Idaho, and Chairwoman of the House Committee on Financial Services Rep. Maxine Waters, D-California have both said they expect the Federal Reserve will set up the kind of liquidity facility the industry coalition is seeking. The Conference of State Bank Supervisors has also made similar calls.
Members of the industry coalition that signed the statement are:
- Independent Community Bankers of America
- Leading Builders of America
- Local Initiatives Support Corporation
- Mortgage Bankers Association
- National Apartment Association
- National Association of Affordable Housing Lenders
- National Association of Home Builders
- National Association of Realtors
- National Council of State Housing Agencies
- National Housing Conference
- National Multifamily Housing Council
- The Real Estate Roundtable
- Structured Finance Association
- Up for Growth Action
- U.S. Mortgage Insurers
