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 signed last week by President Trump comes with significant benefits for homeowners who are unable to make their mortgage payments, most notably a moratorium on foreclosures and the right to forbearance.
Forbearance allows borrowers with a federally backed mortgage to put off payments for at least six months if they suffer economic hardship during the pandemic. The law requires lenders to approve forbearance if requested by the borrower, touching off a scramble by homeowners as bills came due this month.
The Mortgage Bankers Association estimates that the burden on lenders could range from $75 billion to $100 billion or higher if one-quarter of borrowers take advantage of forbearance for six months or longer.
“Policymakers rightly chose to respond, but made mortgage servicers responsible for delivering these government-mandated benefits, and the industry is prepared to supply that relief,” the letter said. “The established forbearance framework is appropriate, as it gets help to the most people as quickly as possible. But the scale of this forbearance program could not have been foreseen by mortgage servicers, or fully anticipated by regulators.
“It is therefore incumbent upon the government to provide the final piece of the puzzle – a liquidity facility for single-family and multifamily servicers – to ensure that the entire industry can deliver much-needed economic relief to consumers through this unprecedented forbearance plan. While some servicers will not need assistance, many others will require temporary support to deliver forbearance at the scale and for the duration required.”
Read the full letter here.
Organizations that signed the letter include the Independent Community Bankers of America, Leading Builders of America, Local Initiatives Support Corporation, Mortgage Bankers Association, National Apartment Association, National Association of Affordable Housing Lenders, National Association of Home Builders, National Association of REALTORS, National Council of State Housing Agencies, National Housing Conference, National Multifamily Housing Council, The Real Estate Roundtable, Structured Finance Association, Up for Growth Action, and U.S. Mortgage Insurers.