On April 4, 2020, the Mortgage Bankers Association (MBA) and the following mortgage industry trade groups released a statement calling on the Federal Housing Finance Agency, the Federal Reserve,and the Department of the Treasury to provide a source of liquidity to mortgage servicers dealing with increased advancing obligations as a result of homeowners and renters missing payments and/or requesting forbearances due to the impact of the COVID-19 pandemic.
- 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
- S. Mortgage Insurers
The statement echoed the message of the March 22, 2020, MBA Letter sent to regulators by the MBA and seven industry trade groups prior to the passage of the CARES Act, in which the groups expressed support for mortgage forbearance and stressed the need for the creation of a servicer liquidity facility in connection with a forbearance plan. For a discussion of the March 22, 2020, Letter, see here.
The April 4, 2020, statement praised the forbearance provisions of the CARES Act as “appropriate” but stressed that the scale of it could not have been foreseen by the mortgage servicers who, in many instances, will be required to advance the missed payments to the investors in the mortgage-backed securities that own the applicable mortgage loans. For a discussion on the expected consequences of the CARES Act forbearance plan on mortgage servicers, see here. It stressed that, without support, the mortgage servicers will not be able to fund the advances required as a result of the forbearance plans, which will lead to widespread default by mortgage servicers and dire consequences for the mortgage finance industry and the economy generally. Ginnie Mae has announced plans for a liquidity facility to support mortgage forbearance (also see this link). However, this plan will not address 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 April 4, 2020, statement called a liquidity facility for servicers that will support these types of advances the “missing piece of the puzzle.” The statement warns that if action is not taken by regulators imminently, it will lead to volatility in the market and destabilize the mortgage finance Industry.
For our summary of the forbearance provisions of the CARES Act and the CARES Act generally, see here.
- On April 1, 2020, the U.S. Department of Housing and Urban Development (HUD) issued a Mortgagee Letter informing mortgagees of special Loss Mitigation Home Retention Options available to single-family borrowers, as well as an extension period for Home Equity Conversion Mortgages (HECM), affected by the COVID-19 Presidentially Declared National Emergency in accordance with the CARES Act. For a detailed description of the Mortgagee Letter, see here.
- On April 8, 2020, a group of bipartisan senators sent a letter to Treasury Secretary Steven Mnuchin addressing concerns about liquidity in the housing market and calling for federal action addressing the liquidity challenges currently facing mortgage servicers in order to avoid the impending crisis facing the mortgage finance industry. The letter was led by Senator Mark Warner (D-VA), and Senators Mike Rounds (R-SD), Bob Menendez (D-NJ), Thom Tillis (R-NC), Tim Kaine (D-VA), Tim Scott (R-SC), and Jerry Moran (R-KS) also signed the letter.
To see our other material related to the pandemic, please visit the Coronavirus/COVID-19: Facts, Insights & Resources page of our website by clicking here.