FHFA Director Discusses Housing Recovery

At the Financial Stability Oversight Council Principals Meeting , Federal Housing Finance Agency (FHFA) Director Mark Calabria gave an update on America’s mortgage finance system, and the coronavirus outbreak's impact on its strength.

In his prepared remarks, Calabria notes that mortgage rates and sales are expected to recover after the crisis, as it is now disrupting both the primary and secondary mortgage markets. Additionally, Calabria stated that the slowdown in economic activity will increase the number of homeowners who struggle to make their mortgage payments.

However, recently, there have been low rates of serious delinquency.

"In the secondary market, Agency MBS liquidity has decreased as investors pull back, especially REITs, money market funds, and some banks," Calabria said. "Also, the Agency debt market has dislocated as a result of economic uncertainty, investor aversion to long-term debt, and a market-wide flight to cash."

"FHFA has taken several steps to support the market and provide relief to homeowners, renters, and multi-family property owners with Enterprise-backed mortgages," Calabria adds. "These steps offer peace of mind to renters and homeowners alike who should not have to worry about losing their homes during this national emergency. They also set standards for the rest of the market"

As part of their effort to assist homeowners, Fannie Mae and Freddie Mac announced mortgage deferment programs. Effective January 1, 2021, Freddie Mac will launch a loss mitigation solution for borrowers who became delinquent due to a short-term hardship that has since been resolved.

Additionally, suspension of foreclosures and evictions for mortgages backed by the U.S. Department of Housing and Urban Development (HUD) and FHFA will extend at least 60 days.

In a letter to HUD, the NMSA recently advocated for deferments as the best tool to help homeowners and the industry during this time.

“This option is preferred over forbearances, trial options, and modifications currently being discussed to assist homeowners,” the letter states.