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The Best of DS5: Inside the Industry – Part 1

Last spring, in response to the COVID-19 pandemic, Five Star Global launched DS5: Inside the Industry, a video newscast format that highlights economic and industry updates from its executives and leaders. Since then, Five Star's editorial team has produced insightful coverage of, among other topics, COVID-19 and the changing regulatory landscape as it relates to the default servicing industry.

As you celebrate the holidays this week, Five Star invites you to revisit some of our best interviews from the past nine months.

Dr. Mark A. Calabria, Director, Federal Housing Finance Agency

Director Calabria discussed what regulators are doing to assist homeowners, lenders, and servicers, including the mortgage forbearance programs being offered to homeowners. From the onset of the health crisis, Calabria repeatedly urged borrowers to "be honest," because borrowers were not required to show any proof of financial hardship in order to skip payments for up to a year.

“We’re operating on the honor system,” Calabria said. “We are asking and we’re putting together a script for servicers. This is supposed to be limited to if you’ve lost your job, you’ve lost income. Please, if you haven’t lost your job, continue paying. If you can pay your mortgage please do so because we really need to focus on the people who can’t,” Calabria said, addressing the consumer. At the time, Calabria predicted some 2 million borrowers would seek loan forbearance last spring, and he said that mortgage servicers, as well as Fannie and Freddie, could handle that if it was just for a few months.

Allen Price, SVP and Head of Sales, BSI Financial
Price told DS News the Fed had been “on point” with its COVID response as it related to the financial community.

“The response has been structured in a way that benefits both the financial system and homeowners … let’s not forget there’s both of those pieces,” he said. Speaking of the bipartisan stimulus package, he said, “The overarching point is that the government did step in and do something.”

The episode also includes insights from Robert Caruso, CEO, ServiceMac.

Sharron Levine, Director, Office of Minority and Women Inclusion, FHFA

Levine discussed the challenges brought on by remote working and what the FHFA, and the industry, can do to ensure employees remain engaged during a time of crisis.  

One of the biggest challenges is “communication,” she said, because it has to be seamless—the same telecommunicating as it is in the office. The medium is different, she said, but she strives to maintain the quality. “As a government agency we have a specific vision that we must continue ... to know your employees and their mindsets … help the whole team feel more engaged.”

Sean Ryan, CEO, Aspen Grove Solutions

Ryan discussed a white paper entitled "Forbearance in the CARES Act: A Review of Issues, Impact, and Mitigation Strategies," in which his company explores pressing industry concerns stemming from COVID-19, including loan modifications and property inspections. 

Its mission, according to Ryan, was “creating a unified process with proper automation and automated documentation is critical to scaling the operational management of the CARES Act forbearance process, meeting regulatory requirements without challenges, and preparing for the upcoming modification wave at the end of the forbearance period.”

John Lynch, CEO, PCMA

Along with Holden Lewis, a housing and mortgage specialist for Nerd Wallet, Lynch discussed the Fed’s plan for mortgage-backed securities.  

Lynch noted that “we’re waiting for the Fed to step in and support non-agency RMBS,” though he added it was probably low on the list of the Fed’s priorities at the time. “Weeks are seeming like months,” he told DS News. He knew Non-QM's would be the last ones to be dealt with, he said at the time, though he knew it was “on the radar.”  

Lewis discussed mortgage rate trends in the months ahead and the Fed’s announcement to purchase MBS to stabilize the mortgage market. “We’ve located the rate floor,” he said. Don’t expect it to go much lower. He said that what happened to rates after the pandemic struck was the opposite of what he expectedThe situation is “a benefit to lenders now” but that “there are more clouds than silver linings for borrowers.”