United Wholesale Mortgage CEO Mat Ishbia on Tuesday called embattled Federal Housing Finance Agency Director Mark Calabria “a great leader” who is “doing good things” amid the coronavirus pandemic.
“Mark Calabria is trying to do the right thing,” Ishbia said in an interview with National Mortgage Professional Magazine on Facebook Live. “It’s really easy to judge people and say I wish Mark Calabria would do X, I wish the CEO of Fannie Mae would do Y, I wish the Fed would do Z, Trump would do A. He’s doing his best to try to help not just mortgage lenders but everybody. He’s overseeing Fannie and Freddie.
Ishbia continued, “I would tell him to keep up the great work, continue to listen to people that are out there doing the jobs, who are in the weeds. I think he does that. I think he’s a great leader. I think he’s doing good things.”
Calabria has come under fire from many in the mortgage industry, members of Congress and analysts. Critics have said he did not recognize the threat to the industry caused by forbearance and was too slow to act to boost the mortgage industry at a time with growing liquidity concerns.
CARES Act
The $2 trillion CARES Act 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.
However, lenders are required to repay creditors – creating a liquidity shortfall if borrowers aren’t making payments.
On April 1, Calabria said he expected 300,000 Fannie Mae and Freddie Mac loans – or 1 percent of their mortgages – to go into forbearance in April.
He then 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.”
On April 8, Calabria reiterated to HousingWire that he expected 1 million Fannie and Freddie loans would be in forbearance by May.
These predictions proved to be way off. As of April 23, an estimated 1.57 million Fannie and Freddie loans were already in forbearance – with more on the way as millions more Americans file for unemployment and mortgage payments due May 1.
FHFA Acts
Calabria and FHFA did eventually act. FHFA announced last week that mortgage lenders will only have to cover four months of missed payments from borrowers under forbearance during the coronavirus pandemic.
FHFA said that mortgage servicers with Fannie and Freddie loans will have “no further obligation to advance scheduled payments” to creditors after four loan payments have been missed. In short, the announcement means the loans in forbearance due to the coronavirus can be kept in mortgage-backed security pools as long as they are in forbearance.
A day later, FHFA announced that it will allow Fannie and Freddie to purchase some single-family mortgages in forbearance in an attempt to support the liquidity of mortgage lenders during the coronavirus pandemic. FHFA took action in response to borrowers seeking mortgage forbearance shortly after closing on loans – and before the lender could deliver the loan to Fannie Mae or Freddie Mac (GSEs).
Prior to the change, loans in forbearance were ineligible to be sold under Fannie and Freddie requirements, placing the borrower and the lender in jeopardy.
The Mortgage Bankers Association offered tepid support for the announcement but said federal regulators must provide more support – and should include cash-out refinances under the new rules. That has not happened.
“We welcome the change in policy that directs the GSEs to purchase most loans in forbearance, providing needed liquidity for lenders who provide sustainable mortgage options to borrowers,” MBA President and CEO Robert D. Broeksmit said. “More work needs to be done to ensure that the details of the forbearance policy do not constrain credit availability. We will continue working with FHFA and the GSEs to arrive at more appropriate pricing and broad coverage for all transactions.”
Despite the criticism, Ishbia said Tuesday that Calabria is doing a good job in difficult conditions.
“He’s got to oversee Fannie and Freddie and all those details,” Ishbia said. “I would tell him to keep doing what you’re doing, keep up the positivity, and keep thinking about talking to people in the weeds.”