Steven Mnuchin
Bloomberg reports [1] that Treasury Secretary Steven Mnuchin said that there are currently no plans to create a Federal Reserve facility to inject funding into nonbank mortgage servicers.
He added recent government actions will help firms address the millions of borrowers missing their mortgage payments.
Mnuchin addressed Ginnie Mae’s Pass-Through Assistance Program to advance funds to mortgage bondholders, covering an obligation that would have fallen on servicers.
Bloomberg reports the Treasury Secretary told them in an interview that Ginnie Mae’s actions, combined with recent measures taken by the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mace, will “deal with liquidity concerns.”
“We’re not looking at a Fed facility for this at this time,” Mnuchin told Bloomberg. “The moves that both regulators have just taken are more than sufficient to create liquidity.”
The FHFA, in an effort to alleviate servicers, recently announced that the GSEs would be allowed to purchase mortgages [2] that have entered in COVID-19 forbearance plans, under certain criteria.
The FHFA is also instructing the GSEs to main loans in COVID-19 forbearance plans in MBS pools for at least the duration of the forbearance plan.
Mortgages that are delinquent for more than four months, historically, were purchased out of MBS pools by the GSEs. Loans with COVID-19 payment forbearance shall be treated “like a natural disaster event” and will remain in the MBS pool.
“Ginnie Mae and FHFA's recent actions to help mortgage servicers is much needed support in this time of crisis,” said Ed Delgado, President and CEO, Five Star Global. "The scope of this pandemic demands that we explore all options to ensure the stability of both the industry and the entire American homeownership ecosystem; the stakes are too high to do any less.”
In addition, both Republican and Democratic lawmakers [3] have been pressuring the federal government in recent weeks to assist mortgage servicers.
Maxine Waters, Chair of the House Finance Services Committee, sent a letter [3] to Mnuchin and Federal Reserve Chair Jerome Powell requesting funds for servicers.
“The Fed and Treasury should use powers given to them under recent stimulus measures to provide liquidity to servicers facing shortfalls,” House Financial Services Chairwoman Maxine Waters and Sherrod Brown, the top Democrat on the Senate Banking Committee, said in the letter.
Steps that government-sponsored Ginnie Mae has taken may not be enough, the lawmakers wrote.
This letter came just days after 20 Republican members of the U.S. House of Representatives requested funding for mortgage servicers.