The only rule explicitly stated by the GSEs is “forbearance does not mean payments are forgiven.” Meanwhile, the FHFA and CFPB have joined hands to protect consumers from fraudulent forbearance activities.
Regulators have acknowledged that the lack of legal clarity and the speedy implementation of the new forbearance requirements may set the stage for exploitation by unscrupulous or ill-informed servicers.
Of course, early this spring, the FHFA, in trying to aid consumers economically impacted by the pandemic, requested that servicers provide forbearance.
In an industry update, Keefe, Bruyette & Woods predicts it may still take some time before the establishment of an emergency funding facility for residential servicers with MBS payments coming due.
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.
Analysts estimate that GSE forbearance programs will ultimately cost servicers between $80 billion and $150 billion in advances and escrow payments, bolstering the theory that only the Federal Reserve has the wherewithal to provide interim financing.