By Jim Perskie
Federal Housing Finance Agency Director Mark Calabria told Congress on Tuesday that he will submit legislative recommendations net week to strengthen the agency’s regulatory and supervisory authority “to fix structural flaws in our housing finance system.”
Testifying before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Calabria also stressed FHFA had done significant work to support borrowers, renters and the housing market as a whole during the COVID-19 pandemic – but challenges lie ahead.
“FHFA recognizes that more work remains,” Calabria said. “The crisis caused by COVID-19 is not over. The full economic and financial impact of the pandemic is not yet known. The future state of the labor market remains uncertain. The mortgage market is still under stress. For these reasons, the FHFA team is still hard at work to ensure our policies continue to respond to the challenges as they evolve.”
In response to the pandemic, FHFA banned foreclosure on federally backed mortgages through June 30 – and implemented forbearance policies that allowed borrowers to pause making mortgage payments for 180 days.
As of May 31, 4.3 million U.S. mortgages were in forbearance – or roughly 8.53 percent of all mortgages in the country, according to the Mortgage Bankers Association. That’s up from 0.25 percent in early March.
“We remain committed to working with other federal agencies, Congress, our regulated entities, and stakeholders to get through this difficult time,” Calabria said. “That said, at this point, I am encouraged by what the data tells us about the state of the mortgage market and the capacity of servicers following FHFA’s robust policy response.”
In this week’s forbearance report, the number of bank-managed mortgages in forbearance decreased for the first time.
“But this does not mean that all is well,” Calabria said. “This crisis has provided ample evidence of the critical vulnerabilities in our mortgage system that put taxpayers and our housing market at risk. Most notably, Fannie Mae and Freddie Mac lack the capital to withstand a serious housing downturn. This undermines their countercyclical role and jeopardizes their important mission.”
Calabria said he will submit legislative recommendations to strengthen FHFA next week as part of the agency’s annual report to congress.
“Only Congress can enact the reforms necessary to fix the structural flaws in our housing finance system,” Calabria said.