Ed DeMarco on the mortgage industry’s tremendous uncertainty
In today’s Daily Download episode, HousingWire Digital Producer Alcynna Lloyd interviews Housing Policy Council President and former Federal Housing Finance Agency Acting Director Ed DeMarco on how COVID-19 has impacted the housing ecosystem, as well as what issues the housing industry will need to tackle once the pandemic passes.
For some background on the interview, here’s what has happened in the industry so far.
In April, despite growing calls from the housing industry for a federally backed liquidity facility for servicers to address the increase in forbearance requests due to the coronavirus, Federal Housing Finance Agency Director Mark Calabria told HousingWire that no such facility was coming.
This prompted David Stevens, the former head of the Federal Housing Administration and CEO of the Mortgage Bankers Association, to write that the mortgage industry was “standing on the precipice” of widespread havoc due to a potential deluge of forbearance requests from borrowers.
Stevens’ sentiment differed greatly from Calabria, who told HousingWire that he did not believe the industry was facing the calamity that Stevens and others predicted, especially on the nonbank side. In fact, despite the industry’s concerns of growing forbearance requests, Calabria said he expected approximately 1 million GSE mortgages to be in forbearance by May.
In response, more than 20 Republican members of the House of Representatives sent a letter to the Department of the Treasury, urging Treasury Secretary Steve Mnuchin to create a liquidity facility for servicers that might find themselves in financial distress due to advancing principal and interest payments to investors on loans that are in forbearance.
They were later joined by two of the top Democrats in Congress and The Conference of State Bank Supervisors, in their plea to have the government step in and help servicers. However, their calls were unanswered and the nation’s forbearance request kept climbing.
By late April, Fannie Mae revealed that they had approximately 1 million GSE mortgages in forbearance at the GSE alone and they didn’t expect the figure to stop growing any time soon.
As a means of combating this uptick, the GSEs recently offered other solutions, such as allowing servicers who collect payments on mortgages backed by Fannie Mae and Freddie Mac to only have to cover four months of missed payments on loans in forbearance.
However, the big question now is what happens when that four-month period is over? Well, as it turns out, the GSEs themselves are preparing to cover any remaining advances for as long as those loans remain in forbearance.
The Daily Download examines the most captivating articles reported from the HousingWire newsroom. Each afternoon, HousingWire provides its readers with a deeper look into the stories that are not only chronicling the biggest announcements within the housing finance industry but are also helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd.
HousingWire articles covered in this episode:
- Calabria: No servicer liquidity facility coming, but GSEs may pull servicing from struggling companies
- Calabria: No nonbank is too big to fail
- Republicans call on Treasury to create liquidity facility for servicers
- Top Democrats, state banking regulators now also pushing government to help struggling mortgage servicers
- Fannie Mae already has 1 million mortgages in forbearance, but thinks that number may double
- Fannie Mae, Freddie Mac are preparing to cover servicers’ advances on loans in forbearance