Will the FHFA kill the mortgage industry?

In today’s Daily Download episode, HW+ Managing Editor Brena Nath covers a PULSE article from former Mortgage Bankers Association President David Stevens, discussing how the Federal Housing Finance Agency’s actions have resulted in significant credit contraction for the mortgage industry.

In his HousingWire PULSE article, Stevens says:

It is now over one month since the CARES Act was passed, creating a blanket forbearance option for all borrowers in a GSE, FHFA, VA, or USDA loan to skip six to 12 months of payments. Legislation established by Congress with the intent of calming concerns of homeowners across the country has thrust an entirely new credit availability contraction over the entire nation.

Because of the rush to pass legislation, the unforeseen adverse impacts could not have been fully vetted in advance. As a result, we found a multitude of challenges, but it really came down to these two:

1. How would mortgage servicers come up with the tens of billions in needed advances to bond holders of loans in forbearance?
2. What about borrowers who went into forbearance after settlement and before the loans were sold to the GSEs or into GNMA securities?

Unfortunately, the FHFA director made some unwelcome judgmental comments and policy decisions that have resulted in an unprecedented tightening of credit across the entire mortgage industry, threatening to impair a key sector of the economy that some economists were expecting would help lead us back to recovery.

Following the main story, HousingWire Digital Producer Alcynna Lloyd covers Fannie Mae’s announcement that more than 1 million of its borrowers are already in forbearance, plans by the nation’s top GSEs to make payments directly to investors for loans that stay in forbearance longer than four months, and a report from OJO Labs that details how COVID-19 has changed the mindset of U.S. potential homebuyers.

The Daily Download examines the most captivating articles reported from the HousingWire newsroom. Each afternoon, HousingWire provides its readers with a deeper look into the stories that are not only chronicling the biggest announcements within the housing finance industry but are also helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd.

HousingWire articles covered in this episode:

• [PULSE] David Stevens: FHFA actions resulted in unprecedented tightening of credit
• Fannie Mae already has 1 million mortgages in forbearance, but thinks that number may double
• Fannie Mae, Freddie Mac are preparing to cover servicers’ advances on loans in forbearance
• How COVID-19 has changed the mind of potential homebuyers