Since March, spreads between SOFR and the three-month LIBOR have widened to roughly 80 basis points. The five-year average, which the ARRC recommends as a “spread adjustment,” is only 27 bps.
The new policy applies to borrowers who can afford to resume making their regular monthly mortgage payments, but are unable to cover the remittances they missed during forbearance...
The GSEs’ showing in the first quarter only reflects one full month of the impact of the coronavirus crisis. As potentially millions more homeowners stop paying their mortgages, the enterprises face the prospect of an even more challenging second quarter. (Includes data chart.)
Freddie Mac believes the market for credit-risk transfers may never return to pre-COVID levels because of the potential impact of the pandemic on mortgage performance.
The coronavirus laid waste to Fannie’s first-quarter profit but those costs were offset by a $637 million gain in the fair market value of its CRT. But not for long.
In addition, Fannie and Freddie have helped reduce face-to-face interactions during the closing process by expanding the use of powers of attorney and remote online notarizations.
At the end of the forbearance period, mortgage servicers will provide homeowners several options for making up missed payments, Fannie Mae and Freddie Mac reassured borrowers.