The MBA argues that FHLB advances would offer REITs a cheap alternative to repo financing. One way to offset the added risk posed by REITs would be to increase the haircuts on their collateral requirements.
Nonbank lenders and mortgage real estate investment trusts stand to gain from expanding the eligibility requirement for FHLBank membership, according to industry comment letters.
If servicers’ cash crunch becomes critical, the onus of creating a liquidity facility would fall on the Federal Reserve and Treasury, not on the FHFA, agency Director Mark Calabria said.
Economists at Fannie and Freddie are “relatively optimistic” about mortgage originations in 2020, despite the economic impact of COVID-19. But not if social distancing remains in place beyond May.
According to independent mortgage bankers, aggregators are adding credit overlays and refusing to buy loans in response to post-closing forbearance risk.
An FHFA spokesperson said that, while Director Mark Calabria hasn’t issued a specific directive on providing credit, he has made it very clear that Fannie and Freddie must prioritize their own safety and soundness.