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.
The $13 million Milbank contract, which follows the agency’s February selection of Houlihan Lokey as its capital markets advisor, suggests the FHFA remains committed to recap-and-release.
The new “flexibilities” cover both originations and appraisals. On the origination front, Fannie and Freddie will reduce the acceptable age of income documentation on most loans to 60 days from 120...