Many lenders are tightening lending standards as COVID-19 spreads, but is there room to increase credit access to help first-time homebuyers and others achieve their goals of homeownership?
While lenders are seeking to ensure access to credit, they should also do their diligence to ensure they are originating safe loans, explained Donna Corley, Freddie Mac executive vice president and head of single-family business.
“Every lender may be different in their approach, but we all must play our part to ensure we’re putting borrowers into homes that they can keep,” she said.
HousingWire sat down with Corley to discuss handling credit and risk as the pandemic spreads.
HW: How should lenders balance opening access to credit with risk during this time?
Donna Corley: Every lender may be different in their approach, but we all must play our part to ensure we’re putting borrowers into homes that they can keep. Freddie Mac is in the market every day providing liquidity, stability and affordability to the industry. We’re buying loans that meet our underwriting guidelines to ensure that we keep the mortgage money flowing to lenders, who can provide financing to prospective buyers. That is the countercyclical role Freddie Mac was created to play.
HW: Do you foresee a substantial drop in credit performance as we come out of the pandemic?
DC: Right now, we are focused on making sure homeowners with Freddie Mac-owned mortgages who are directly or indirectly impacted by COVID–19 are able to stay in their homes during this challenging time. We’re doing this by offering mortgage relief options for those who are unable to make their mortgage payments due to a decline in income.
For example, we are providing mortgage forbearance for up to 12 months, and waiving penalties and late fees during that time. We have suspended all foreclosure sales and evictions of borrowers living in Freddie Mac-owned homes for at least 90 days. And we are offering loan modification options that lower payments or keep payments the same after the forbearance period.
HW: What kinds of things can the secondary market do to help keep the access to credit open? Or is there anything they can do?
DC: Freddie Mac has already taken a number of actions to make it easier for the mortgage industry to buy or refinance a home during a period that requires social distancing. Among others, we are offering flexible approaches to allow lenders to verify the employment status of borrowers, knowing that traditional verbal verification may be difficult to obtain.
We’re also allowing alternatives to interior appraisals to keep appraisers and homeowners safe. These actions will help us provide much-needed liquidity and stability to the housing market in this difficult time. That’s fundamentally our role – to be here in good times and in bad to keep the market going.
HW: HousingWire recognized you as one of our 2019 Women of Influence. What is your secret to success?
DC: I wish I could say there was just one secret to success. From my experience, success is the result of a lot of hard work. The way I managed my career was by focusing on excellence and doing my job well. There’s no substitute for excellence if you want to be successful and move ahead. Furthermore, I think the true definition of success isn’t just in what you accomplish, but how you accomplish it.
A final thought: once you do make it to the top of the ladder, success means more if you lean in and lend a hand to women coming up behind you.
HousingWire’s nominations are now open for our 2020 Women of Influence. But they won’t stay open long – nominations close on April 24, 2020. So nominate your Woman of Influence today, we want to get to know them!