In an interview with HousingWire on Tuesday, Federal Housing Finance Agency Director Mark Calabria announced that he does not think servicer liquidity should be made available – a thought that the Mortgage Bankers Association immediately took issue with.
Calabria’s claim came despite growing calls from the housing industry for a federally backed liquidity facility for servicers to address the increase in forbearance due to the coronavirus.
So is the FHFA’s plan?
“We are, at this point, comfortable with our ability to deal with any servicers that may be distressed so that we can either turn them into subservicers or transfer their servicing to other parties,” Calabria said. “And we believe at this point, given the number on uptake of forbearance, we’ve seen that we can transfer servicing in a way that’s not too disruptive.”
The MBA has voiced its strong opposition to this strategy.
“The FHFA Director’s recent statements send a troubling message to borrowers, lenders, and the mortgage market,” MBA President and CEO Robert Broeksmit said. “Servicers are required to offer borrowers widespread forbearance under a plan devised and approved first by FHFA and then codified by the CARES Act.”
“Fannie Mae and Freddie Mac are contractually obligated for the payments to investors,” Broeksmit said. “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 finance market.”
In his comments, Calabria also stated that since borrowers would be transferred to larger servicers, they would experience better customer service — logic that the MBA took issue with.
“We also strongly disagree with his characterization of the customer experience as it relates to the size of a mortgage servicer,” Broeksmit said. “Millions of Americans are well-served by their local independent mortgage bank, community bank, or credit union, and many chose to obtain their mortgage from those institutions for that precise reason. In the Director’s own words, ‘Fannie and Freddie were created to provide small lenders, community banks, and credit unions with access to the market.’ We urge the Director to follow that principle in responding to this crisis.”
The MBA insisted that servicers must be supported in order to provide the relief that borrowers need during this time.
“The Director’s unwillingness to offer support from Fannie Mae and Freddie Mac for the very firms that he and Congress asked to execute his agency’s forbearance plan only reinforces why the Federal Reserve and U.S. Treasury must create a financing program to help residential and commercial/multifamily mortgage servicers who will have to provide unprecedented levels of mortgage payment forbearance,” Broeksmit said. “Servicers are eager to provide this help, and while we all hope that the duration and severity of the economic dislocation caused by the pandemic will be manageable, we must plan now for a more extended disruption, as I made clear to the director this evening.”
