Mortgage Servicers Expect Annihilation Due To The Coronavirus And Are Lining Up For Trump Bailouts
Mortgage servicers are already waiting in line for their corporate welfare checks from the Trump administration. The Mortgage Bankers Association said deferred and late mortgage payments because of the coronavirus could trigger a financial nightmare for mortgage servicers.
Fannie Mae and Freddie Mac have instructed servicers to suspend all foreclosure actions and evictions for at least 60 days.
HUD who handles FHA mortgage loans also soon followed suit.
However, not all mortgage loans are included in the Trump Administration moratorium.
The MBA sent a letter to Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell begging the government for a bailout.
MBA CEO Robert D. Broeksmit asked for the Federal Reserve and Treasury to develop a liquidity plan to support the mortgage servicing sector
The association anticipates that strains on servicers could top $100 billion.
In normal and even stressed environments, servicers can withstand this liquidity pressure. However, borrower forbearance at the levels being proposed extends well beyond any servicer advance obligations previously envisioned.
Broeksmit told CNBC that there is not enough liquidity in the mortgage servicing area. He also stated that mortgage servicers won’t be able to meet the needs of the investors who back the mortgages “and the whole process will break down.”
New York Throws Down The Hammer
The New York Department of Financial Service also announced a statewide moratorium. The NYDFS moratorium includes a 60-day moratorium on all foreclosure and eviction actions. It also includes a moratorium on the collection of mortgage and rent payments. In addition, the NYDFS is also directing servicers to proactively contact borrowers to communicate the new relief options.
Meanwhile, Bank of America told customers impacted by the coronavirus that they can ask for a mortgage, credit card, and other loan deferments.
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