Some $714 billion of loans were removed from Ginnie MBS last year, with about 86% of them representing borrower payoffs. Repurchases of delinquent loans were also up sharply from 2019. (Includes two data charts.)
Performance on non-agency MBS has improved after the spike in late payments seen in the spring. However, borrowers who are still delinquent could prompt losses for investors.
If the coronavirus continues to wreak havoc and the federal government doesn’t provide additional stimulus, the performance of residential MBS is expected to take a significant hit.
Freddie has issued several securities backed by re-performing loans during the pandemic. However: Are these loans still protected by the FHFA’s moratorium on foreclosures?
Various announcements by Ginnie, FHFA and the GSEs helped investors in MSRs get more comfortable in recent months. Meanwhile, use of Ginnie’s PTAP financing option remains minimal.
With a relatively high share of borrowers missing mortgage payments, investors in non-agency MBS are seeing reduced cash flows and, in some cases, losses. Though mortgage performance is improving, the outlook for investors remains uncertain.
Nonbanks in the process of making their public debuts note that the refi boom (probably) won’t last forever, and they could eventually face financial difficulties making servicing-advance payments for loans in forbearance.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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