In a press conference, Treasury Secretary Steven Mnuchin addressed the impact of the coronavirus pandemic on mortgage servicers.
“We’re going to make sure that the market functions properly,” he told reporters at a White House briefing. According to Bloomberg, Mnuchin added that the Treasury Department has had discussions with the Federal Housing Finance Agency about the mortgage market.
“We have all the appropriate people on it,” he said. “We’re very aware of the issue.”
Mnuchin said a Financial Stability Oversight Council task force had specifically studied the issue of mortgage servicer liquidity.
Servicers will be impacted by the $2 trillion stimulus package as borrowers will be allowed to delay payments on government-backed mortgages for as long as a year. Analysis from Black Knight’s latest Mortgage Monitor Report found that if 5% of homeowners seek forbearance, servicers would need to advance more than $2.1 billion in principal and interest per month to security holders. If the number of homeowners seeking forbearance rises to 10%, the monthly cost could jump to $4.2 billion.
“The various forbearance programs being offered to borrowers via the recently passed CARES Act, as well as via individual agencies and mortgage servicers, are a key difference today,” Black Knight Data & Analytics President Ben Graboske said.
Department of Housing and Urban Development Director Dr. Ben Carson also gave an update on how the pandemic is impacting borrowers directly. In an interview with Daily Caller, Dr. Carson stated how future stimulus packages will need to offer assistance to servicers to provide some amount of liquidity.
“What we have to think about, though, are the services and the people providing those mortgages, they have obligations as well,” Dr. Carson said. “Particularly the non-banks, who really do a lot of the mortgage lending these days, who don’t have, you know, enormous amounts of cash, we have to make sure in the stimulus package that we provide them a mechanism or we’re going to destroy the mortgage industry. So those are the things that we’re obviously thinking about.”