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The Best of DS5: Inside the Industry – Part 2

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.

Ed DeMarco, President, Housing Policy Council

DeMarco shared insights related to the response by the federal government to the COVID-19 crisis, as it relates to servicers and borrowers. 

“The federal government and the mortgage industry itself have taken thoughtful and appropriate steps given the circumstances we suddenly face,” DeMarco said. “The idea that there are literally millions of Americans that have suddenly become unemployed, furloughed, reduced income is unexpected, and it really is a direct response of the government to this national health crisis.” 

Don Layton, CEO, Freddie Mac (2012-2019); Senior Industry Fellow, Harvard Joint Center for Housing Studies

Layton shared his thoughts about how the Fed has worked to stabilize the mortgage market. He also touched on how the GSEs are working to address potential liquidity shortfalls brought on by mortgage forbearance programs. “It’s about policy and it’s also about politics,” Layton said. “The mortgage servicing industry has forecast about a 25% forbearance rate … servicers and nonbank servicers will be under a tremendous amount of stress for liquidity.” 

Thomas Wade, Director of Financial Services Policy, American Action Forum

Wade spoke about the challenges involved in transitioning Fannie Mae and Freddie Mac out of conservatorship. Wade noted that the Trump administration did "seem to be moving towards releasing the GSEs from conservatorship ... I, and many others, were disappointed that the GSEs are likely to retain many of the advantages of inherent systemic riskiness post-conservatorship that characterizes them now," Wade said. 

Ted Tozer, Senior Fellow, Housing Finance Program, Milken Institute; President, Ginnie Mae (2010-2017)

Tozer discussed the possibility of the Federal Reserve injecting funds to assist mortgage servicers, and he added more on the topic of Ginnie Mae’s Pass-Through Assistance Program. Tozer noted, as businesses start to reopen some may not come back to work and delinquencies may increase. 

"Those things are going to possibly force the situation for the Fed, the Treasury to put something in place," predicted Tozer. “Better to hope for the best and plan for the worst,” he added. He called the Pass-Through program “a last resort.” 

Seth Appleton, Principal EVP, Ginnie Mae

Appleton delved into the purpose and future of Ginnie Mae’s Pass-Through Assistance Program. Ginnie Mae established the program, “nationwide in scope,” to advance funds to servicers. Its first release of data revealed it advanced $836,682 in April to three outfits. 

The implementation, he said, “has been a study in teamwork at HUD …[wherein] the purpose is to ensure the continued flow of interest and principal to our investors ... support the forbearance policy … mitigate servicing disruptions to borrowers... [and] minimize risk to taxpayers,” Appleton explained.   

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected]

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