“Mortgage servicers are already hearing from a substantial number of homeowners who are concerned about their ability to make their mortgage payments on time,” noted Mortgage Bankers Association (MBA) Senior Vice President and Chief Economist Mike Fratantoni. “The mortgage industry is ready and willing to help through the use of established forbearance programs, allowing borrowers who have lost their jobs or been furloughed as a result of the virus the ability to delay their payments for at least six months.”
As strain begins to wear on the servicing side, with a surge in demand infringing upon a workforce either dilapidated by Coronavirus cases or the transition to working remotely, Fratantoni notes that: “Even if a quarter of all borrowers request forbearance for six months or longer, cash demands on servicers could exceed $75 billion and could climb well above $100 billion.”
“It is absolutely critical for the Federal Reserve and U.S. Treasury to immediately establish a liquidity facility so that otherwise solvent mortgage servicers can borrow from the Fed to support these forbearance programs,” continued Fratantoni. “This needed backstop for servicers will ultimately support homeowners during these challenging times.”
H.R. 748 will grant many Americans checks in the amount of $1,200 for individuals, or $2,400 for married couples. To address those who filed for unemployment insurance, they would get an extra $600 per week for up to four months, on top of state unemployment benefits to make up for 100 percent of lost wages.
“The stimulus bill proposal currently working its way through Congress seeks to address certain features of the unemployment insurance systems, such as eligibility requirements and the amount and maximum duration of benefits paid, which are intended to help alleviate some of the financial stressed caused by job loss,” said Doug Duncan, chief economist at Fannie Mae. “Furthermore, payments to households are designed to make up for lost earnings. Proposed support for businesses is intended to help them survive the shock to demand in order to be positioned to re-hire workers after the virus subsides and demand picks back up.”