According to former Fannie Mae CFO Tim Howard, the re-proposed capital requirements are almost 40 times the average of that indicated by stress tests conducted on the GSEs last year.
The move suggests the GSEs’ public offerings — estimated by some to be worth as much as $200 billion — may take place in the midst of the worst economic crisis since the Great Depression.
Borrowers now have the option of simply deferring any forborne payments to the end of their mortgage. In effect, this would work like an interest-free second mortgage, and would become due when the house is sold or the loan is refinanced.
Mortgage servicers’ liquidity issues could ease if non-agency lending is acceptable collateral under the TALF programs, according to Urban Institute’s Jim Parrott.
It’s becoming increasingly clear that unless Fannie or Freddie comes to the rescue of investors, certain pre-2015 CRT deals will sustain losses as millions of borrowers accept mortgage forbearance plans.
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.
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.
RSS