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…

TMN Interview: So Do We Have To Pay Our Mortgages Now?

A $2 trillion COVID-19 relief bill is set to be passed by the House on Friday and sent to President Trump for his expected signature. There are significant sections of the bill pertaining to mortgage and housing, including protections for homeowners who experience economic hardship during the pandemic. The Mortgage Note asked Joshua Rosner, an analyst with Graham Fisher & Co., what the relief bill means for homeowners and lenders. TMN: What does the relief bill mean for borrowers? Rosner: The bill means different things to different borrowers. Borrowers whose mortgages are government backed – by the FHA, Federal Home Loan Banks, Fannie Mae and Freddie Mac – can receive up to 180 days of forbearance which, if the crisis continues after…

Ginnie Mae Loans Left Out Of Relief Bill; Regulatory Fix Possible

As feared by advocates for independent mortgage lenders, the massive $2 trillion COVID-19 relief bill leaves non-bank lenders on the outside looking in when it comes to government providing cash to back loans that lower- to middle-class borrowers may have trouble paying. The bill approved by the Senate does not specifically include non-bank lending institutions. Instead, it specifies relief is for traditional banks – “insured, depository institutions, bank holding company, or any affiliate thereof.” That would exclude non-bank institutions, whose loans are largely backed by the Veterans Administration and Ginnie Mae and traditionally serve low- to middle-income Americans. The Mortgage Bankers Association applauded Senate passage of the legislation but called for the creation of a lending facility to support non-bank…

Will Lower and Middle Class Borrowers Get Shut Out Of Relief Bill?

Will lower- and middle-class borrowers – and the lenders that serve them – get left out of the relief package being considered by Congress? Advocates for independent mortgage services said Monday that current legislation before the Senate puts borrowers from non-bank lenders at greater risk than customers from traditional banks because the bill does not specifically include the non-bank institutions. The language in the legislation before Congress refers to “insured, depository institutions, bank holding company, or any affiliate thereof.” That would exclude non-bank institutions, whose loans are largely backed by the Veterans Administration and Ginnie Mae and traditionally serve low- to middle-income Americans. “If Congress fails to address these shortcomings in proposed legislation and fails to direct the (Financial Stability Oversight…