FHFA Director Mark Calabria spoke Monday at a virtual event, where his session focused on the agency’s current priorities— the talk included two announcements, one about a new GSE-feedback rule, and the other related to extensions to loan flexibilities.
Calabria used his allotted time at a Mortgage Bankers Association (MBA) event to outline steps the FHFA has taken to protect borrowers and renters during the COVID-19 pandemic and to announce two recent changes.
One new FHFA rule, he said, would ensure public input regarding any new product introduced by Fannie Mae and Freddie Mac.
"Building on our commitment to collaboration, today, I am announcing ... that FHFA is releasing a new rule that will ensure stakeholders and the public always have a formal opportunity to provide feedback when the [GSEs] consider new products or lines of business." He later reiterated, "The FHFA is not just willing to hear feedback, it is eager to hear it." (The full press release regarding said rule can be read here.)
Calabria went on to share information related to the FHFA's COVID-19 response, as well as announce extensions to some of the described loan flexibilities, a development discussed in full here on FHFA's website.
"Since early March, we have all been doing our part to respond to the COVID-19 national emergency," he said. "In that time, I have personally held almost 100 meetings and calls to keep an open line of communication."
He continued, "I have been humbled to be able to play my part in this effort. You have seen the team at FHFA move swiftly to respond to the developing challenges. Working with our regulated entities, we have helped borrowers and renters stay safe in their homes. And we have taken steps to help the mortgage market continue functioning both during and after this crisis. When local government offices were shutting down across the country, FHFA authorized loan-closing, employment-verification, and appraisal flexibilities. These flexibilities have kept the origination process open and ensured the physical safety of market participants. And I am pleased to announce today that we are extending these flexibilities until at least November 30."
He added the following highlights:
- We suspended all single-family foreclosures and foreclosure-driven evictions. This policy has protected more than 28 million homeowners and enabled roughly 200,000 families facing foreclosure pre-COVID to stay in their homes. FHFA recently extended the foreclosure and eviction moratorium through the end of this year.
- We allowed homeowners to receive forbearance from their mortgage payments for up to 12 months. We had the Enterprises work with servicers to develop loan modification options and repayment plans. This ensures borrowers will not face payment shock.
- We allowed borrowers in forbearance who return to making payments to repay what they missed when they sell their home or refinance their loan. This made one consistent set of options available to all borrowers in forbearance.
- The payment deferral option is good for borrowers, servicers, and MBS investors, he added.
He said that from the outset, the FHFA has emphasized that those who can make their mortgage payments should continue doing so. Of the borrowers with a GSE-backed mortgage in forbearance, about one-fifth continue to make payments.
"As I announced to the MBA conference this May, FHFA directed the Enterprises to treat these borrowers as current if they buy a new home or refinance," he said. "We made sure that distressed borrowers do not have to deal with endless rounds of paperwork to negotiate with their servicer. This stands in stark contrast to the experience following the 2008 crisis. We specifically avoided the constantly changing rules under HARP and HAMP that added so much confusion in the last crisis."
He said that, while operating on an "honor system," the data thus far shows "very little indication of abuse by Fannie or Freddie borrowers during this national emergency."
He also pointed out that since the 2008 housing crisis, minority homeowners have been disproportionately negatively affected. "Minority homeownership between 2005 and 2015 "plummeted," he said.
The FHFA is particularly interested in oversight that will assist homeowners in the Black and Latinx demographic, he said. In response to the COVID-19 pandemic, he said, "the FHFA acted swiftly to keep borrowers and renters fiscally safe."
To read a transcript of Calabria's statement during this presentation, visit the FHFA website, here.