The Federal Housing Finance Agency (FHFA) announced it would be purchasing certain single-family mortgages in forbearance to support homeowners and mortgage lenders during the coronavirus crisis. The mortgages must meet specific eligibility criteria set by Fannie Mae and Freddie Mac.
“We are focused on keeping the mortgage market working for current and future homeowners during these challenging times,” said FHFA Director Mark Calabria. “Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending.”
Robert D. Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), released the following statement regarding the FHFA announcement:
“We welcome the change in policy that directs the GSEs to purchase most loans in forbearance, providing needed liquidity for lenders who provide sustainable mortgage options to borrowers. More work needs to be done to ensure that the details of the forbearance policy do not constrain credit availability. We will continue working with FHFA and the GSEs to arrive at more appropriate pricing and broad coverage for all transactions.
“The GSEs were chartered to play a countercyclical role providing liquidity to the mortgage market, particularly in times of stress. FHFA originally created the forbearance program, since codified by the CARES Act, which requires lenders to offer forbearance to the unprecedented number of Americans affected by the coronavirus pandemic, regardless of transaction type.
“Lenders have already been forced to increase costs and tighten underwriting requirements to account for situations in which they cannot sell loans due to borrowers availing themselves of the forbearance options that FHFA introduced. The pricing regime announced today is likely to perpetuate some of these more restrictive credit terms.
“Today’s historically low rate environment has the potential to generate much-needed economic stimulus at a time when it is desperately needed in the form of lower monthly payments and by leveraging borrowers’ home equity to invest in home improvements, children’s education, etc. By excluding cash-out refinances, this announcement is likely to reduce that vital stimulus.”
For more information, please visit www.fhfa.gov.