The MBA takes issue with the regulator's stance as servicers are mandated to provide forbearance
Despite industry calls for the government to prop up mortgage servicers that are struggling to meet federally mandated mortgage-forbearance requirements, a top regulator has dismissed the need for a federally backed liquidity facility – drawing the ire of a major industry group.
More than a dozen housing-industry groups and advocacy organizations have called on the federal government to provide a liquidity facility to help mortgage servicers with forbearance efforts resulting from the COVID-19 outbreak. The worry is that as more borrowers need to put mortgage repayments on pause, servicers could run dangerously low on cash. However, Federal Housing Finance Agency Director Mark Calabria recently told HousingWire that Fannie Mae and Freddie Mac won’t be providing a liquidity backstop.
Calabria said that the FHFA had a “plan” to help servicers that find themselves in financial distress – but it’s not the liquidity backstop that the industry is calling for.
“Do we have a liquidity facility that we will be providing via Fannie and Freddie? The answer’s no,” Calabria said. “We don’t have the resources at Fannie and Freddie to do that.”
The Mortgage Bankers Association took issue with Calabria’s position, with MBA President and CEO Robert Broeksmit saying the FHFA director’s comments “send a troubling message to borrowers, lenders and the mortgage market.”
“Servicers are required to offer borrowers widespread forbearance under a plan devised and approved first by FHFA and then codified by the CARES Act,” Broeksmit said. “Fannie May and Freddie Mac are contractually obligated for the payments to investors. Since Fannie Mae and Freddie Mac will eventually reimburse mortgage servicers for the payments they must advance during forbearance, Director Calabria should advocate for the creation of a liquidity facility at the Fed to ensure the stability of the housing market.”
Broeksmit condemned Calabria’s refusal to offer GSE support “for the very firms that he and Congress asked to execute his agency’s forbearance plan.”
The MBA said that the Federal Reserve and the Treasury “must create a financing program to help residential and commercial/multifamily servicers who will have to provide unprecedented levels of mortgage payment forbearance.”
Broeksmit said that while he hoped that the “economic dislocation” caused by the COVID-19 outbreak would be manageable, “we must plan now for a more extended disruption.”
