Share
NAR sent a letter asking the Federal Reserve Board and Federal Housing Finance Agency to use their direct funding from the Treasury to support mortgage servicers and to clear the log jam in the mortgage funding process that has arisen due to potential widespread forbearance.
The social distancing and shelter in place requirements of the response to COVID-19 are weighing on employment and straining incomes. As a result, the federal regulators have called for widespread forbearance. However, servicers are obligated to continue to extend principle, interest, taxes and insurance to mortgage investors during this period. The magnitude of the forbearance will likely be unprecedented, so these payments could add up to tens of billions of dollars outstripping the servicers' reserves.
If servicers have problems advancing funds on current homeowners' mortgages, they will be reluctant to agree to service new mortgages and this will result in fewer home sales.
To alleviate this problem, NAR has asked the Fed and the FHFA to use its powers in combination with the Treasury to support servicers and to free up this log jam. This letter canonizes conversations that we have had with regulators and law makers over the last two weeks.
Servicing will be critical to support housing security during the effort to quell COVID-19 and to sustain the home sales market.