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Mark Calabria: More Work to be Done in Housing

Department of Housing and Urban Development Secretary Ben Carson and Federal Housing Finance Agency Director Mark Calabria appeared before the U.S. Senate Committee on Banking, Housing and Urban Affairs to update the committee on the steps the FHFA has taken to aid homeowners during the COVID-19 pandemic.

"One of our top priorities has been to support renters and homeowners struggling to pay for housing because of COVID-19. To do this, FHFA has directed the Enterprises to put in place certain protections," said Calabria in his testimony. "The Enterprises own or guarantee approximately $5.7 trillion in mortgages. That includes about 43 percent of multifamily units, which represents about 8.6 million households and more than half of single-family mortgages or about 28 million homeowners. FHFA’s policies apply to all single-family homeowners and multifamily property owners with an Enterprise-backed mortgage. In addition, FHFA’s policies also help to set workable standards for the entire market."

Calabria says there is still much more work to be done, stating that the COVID-19 pandemic provided enough evidence that there are critical vulnerabilities in the mortgage system that put taxpayers and the housing market at risk.
"Most notably, Fannie Mae and Freddie Mac lack the capital to withstand a serious housing downturn. This undermines their countercyclical role and jeopardizes their important mission," said Calabria. "To provide the Enterprises a stronger foundation on which to weather periods of financial stress, on May 20, FHFA released a re-proposed capital rule. This rule will help each Enterprise become safe and sound to fulfill its statutory mission across the economic cycle."

Carson, meanwhile, discussed the CARES Act, as well as the Ginnie Mae Pass-Through Assistance Program (PTAP).

"PTAP provides last-resort financing to cover the difference between issuers’available funds and scheduled payment of principal and interest (P&I) to mortgage-backed security (MBS) holders," said Carson. "The timely payment of P&I toMBS holders, consistent with Ginnie Mae’s statutory guaranty, is essential to the liquidity of the MBS market and the confidence of investors who finance housing through the Ginnie Mae program."

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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