Clock’s Ticking: Where Is Ginnie Mae? (Update)

On Friday, March 27, Ginnie Mae announced that it would – within two weeks – implement an assistance program for lenders whose customers can’t make mortgage payments due to the coronavirus pandemic. The two weeks is up Friday, and a spokesman said the agency has “no definitive timetable for this program, but it is expected to be rolled out shortly. Please keep an eye on our website.” Update: Ginnie Mae Announces Support Program For Lenders Lenders will begin to face liquidity challenges starting next week – Wednesday to be precise – as they need to pay creditors for loans they carry. The problem is: Nearly 16 million people have applied for unemployment over the last three weeks, and huge numbers…

Powell: Fed Watching Mortgage Industry Carefully

Federal Reserve Chair Jerome Powell said Thursday that the Fed is closely watching the economic situation around mortgage lenders and appeared to leave the door open to providing liquidity support to the industry. In a webcast with the Brookings Institution, Powell discussed rate cuts, financial safeguards and lending programs enacted by the Fed and other regulators during the coronavirus pandemic. He specifically said the Fed is “watching carefully the situation with the mortgage servicers.” “We certainly have our eyes on that as a key market that does support households and consumer spending, really, which is of course 70 percent of the economy,” Powell said. His comments come amid a volatile political week in the mortgage lending industry as companies, advocates, regulators…

Senators: Feds Must Support Non-Bank Lenders

A bipartisan group of U.S. senators on Wednesday urged federal regulators to provide liquidity to non-bank lenders who say a mortgage crisis is looming due to a potential shortage of cash as borrowers stop making payments during the coronavirus pandemic. The seven senators sent a letter to Treasury Secretary Steven T. Mnuchin, who is chairman of the Financial Stability Oversight Council (FSOC), a day after the head of the Federal Housing Finance Agency said he sees “zero evidence” the federal government needs to intervene. “Given that we could see as much as $100 billion in mortgage payments forborne through this program, it presents an existential threat to these companies, and thus to the broader mortgage market,” the senators wrote in the 1,100-word…

Inspector General Faults FDIC Crisis Preparedness

The Federal Deposit Insurance Corporate’s watchdog issued a report Wednesday that found the agency was ill-prepared to function in the midst of a crisis, due in part to lack policies and procedures in place. The FDIC’s Office of Inspector General review was conducted in 2018 and 2019 was not tied to the coronavirus pandemic, but the findings are relevant to challenges facing FDIC and other federal agencies. The report found: The FDIC did not have documented policies that defined readiness authorities, roles, and responsibilities, including those of a committee responsible for overseeing readiness activities, in the event of a crisis.FDIC should develop an agency-wide readiness plans that identifies the critical functions and tasks necessary to function, regardless of the crisis –…

FHFA Boss Says No Help For Non-Bank Lenders; MBA Pushes Back

Responding to industry warnings of a looming cash crisis among non-bank mortgage lenders, the head of the Federal Housing Finance Agency said Tuesday he sees “zero evidence” that the federal government needs to intervene. FHFA Director Mark Calabria told the Wall Street Journal, “I’ve seen zero [evidence] to suggest that there’s a systemic crisis across the nonbank servicers. If this goes on for a year, maybe. But I think the frustration here is a lot of just misrepresentation.” He dismissed their complaints as “spin.” The Mortgage Bankers Association (MBA) quickly condemned Calabria’s comments. “The Director’s unwillingness to offer support from Fannie Mae and Freddie Mac for the very firms that he and Congress asked to execute his agency’s forbearance plan only…

Housing, Mortgage Industries Seek Liquidity Facility

An array of mortgage, real estate and housing organizations called on federal regulators to ensure cash is available to mortgage lenders who may need financial support as they help homeowners and renters during the coronavirus pandemic. Fifteen organizations urged the Federal Housing Finance Agency, the Federal Reserve and the Department of Treasury to create a liquidity facility to support lenders who are providing relief under the CARES Act. “Any further delay could lead to greater uncertainty and volatility in the market,” the groups said in the letter. “(We) 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.” The $2 trillion CARES Act…

Guest Voices: Calabria’s FHFA Fans Fires Of Contagion

By R. Christopher Whelan This article originally appeared in The Institutional Risk Analyst. “Because uncertainty about the future is fundamental, financial mistakes will continue to be made. They will be made by entrepreneurs, bankers, borrowers, central bankers, government regulators, politicians, and, notably, by the interaction of all of the above.”Alex Pollock, Boom & Bust: Financial Cycles and Human Prosperity New York – In this article, we consider the practical aspects of systemic risk, something that everyone talks about but nobody seems able to understand or quantify. And we are reminded of the wisdom of our friend Alex Pollock, formerly of R Street Institute and now Principal Deputy Director at the Office of Financial Research. He wrote in his 2010 book which we quote above: …

Banking Regulators Ease Enforcement During Pandemic

Federal and state banking regulators announced Friday night that they are granting regulatory flexibility to mortgage lenders as they scramble to work with borrowers who are impacted by the coronavirus pandemic. The policy statement is designed to clarify for lenders what regulators will enforce and what they will let slide in the short term, with 10 million Americans filing for unemployment in the last two weeks and borrowers jamming mortgage servicers’ call centers seeking assistance. It includes flexibility on sending annual escrow account statements and filing early intervention and loss mitigation notices, as required by mortgage servicing rules. “The actions announced today by the agencies inform servicers of the agencies’ flexible supervisory and enforcement approach during the COVID-19 pandemic regarding…

FEMA Extends Flood Insurance Renewal Window

FEMA announced that it is extending the grace period to renew flood insurance policies from 30 to 120 days as homeowners across the nation cope with the coronavirus pandemic. The extension applies to National Flood Insurance Program customers whose policies have an expiration date between February 13 and June 15. There is usually a 30-day grace period to renew policies to avoid a lapse in coverage. “FEMA understands the sense of urgency related to financial hardships and wants to be proactive,” said David Maurstad, deputy associate administrator of FEMA’s Federal Insurance and Mitigation Administration. “We want to make sure that policyholders don’t have to worry that their policy will lapse during the spring flood season or into the start of…

Ginnie Mae Issues Lifeline To Non-Bank Mortgage Lenders

Ginnie Mae announced that it would support non-bank mortgage lenders with the cash they need to weather the coronavirus after Congress left the institutions out of the $2 trillion relief bill. The regulator, which typically backs mortgages to first-time home buyers and low-income borrowers, said Friday it would treat the coronavirus pandemic like it does other natural disasters. This will help lenders pay creditors even if homeowners take advantage of forbearance, which allows them to put off mortgage payments for at least six months if they suffer economic hardship during the pandemic. “Ginnie Mae has the authority to make changes to the requirements of our program, and we are using those powers to tailor the existing disaster pass-through assistance programs…