It’s becoming increasingly clear that unless Fannie or Freddie comes to the rescue of investors, certain pre-2015 CRT deals will sustain losses as millions of borrowers accept mortgage forbearance plans.
The only rule explicitly stated by the GSEs is “forbearance does not mean payments are forgiven.” Meanwhile, the FHFA and CFPB have joined hands to protect consumers from fraudulent forbearance activities.
In an effort to support the industry during the COVID-19 pandemic, mandated use of the redesigned Uniform Residential Loan Application is now scheduled for March 1, 2021.
Over the last couple of weeks, the Federal Reserve has slowly tapered its MBS purchases. But even with healthy MBS prices, mortgage rates remain higher than formula dictates.
An FHFA spokesperson said that, while Director Mark Calabria hasn’t issued a specific directive on providing credit, he has made it very clear that Fannie and Freddie must prioritize their own safety and soundness.
Analysts estimate that GSE forbearance programs will ultimately cost servicers between $80 billion and $150 billion in advances and escrow payments, bolstering the theory that only the Federal Reserve has the wherewithal to provide interim financing.
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