Federal forbearance on government backed mortgages is a panacea to deal with the economic fall-out caused by the novel coronavirus. But eventually there will be implications in the primary and secondary markets.
It was mortgage market Armageddon this week, courtesy of the corona-virus. Lenders were knee-deep in refis but fears mounted regarding an expected spike in delinquencies and about nonbank liquidity. The feds issued a foreclosure moratorium on government and GSE loans.
Out in California, Fremont Bank seems to be telling jumbo customers that if you really want a loan from them, you’re going to pay through the nose. On its website, jumbo pricing for Wednesday was set at 6.375%.
The warehouse lending sector is being inundated with requests for line increases as applications go through the roof. But not all financiers are participating, namely Texas Capital.
And therein lies a chief fear for the mortgage industry: as the economic damage caused by the spreading coronavirus piles up, will nonbank Ginnie issuers have enough liquidity to make those payments in the months ahead?