CNBC reported that a coalition of mortgage leaders sent a request to Federal regulators over the weekend for “desperately needed cash.”
The report from CNBC said the number for mortgage forbearance requests have been coming in at an “alarming rate,” but servicers still need to pay bondholders.
A letter from the coalition, headed by the Mortgage Bankers Association, said the “scale of the forbearance program could not have been foreseen” by servicers or regulators and that the government should provide a liquidity facility.
The report cited Jay Bray, CEO of Mr. Cooper, who said his company has already granted 80,000 forbearances. Mr. Cooper services nearly 4 million loans across the nation.
CNBC quoted Bray as saying, “there is going to be complete chaos” without federal help.
Ginnie Mae announced in March that it will create an All Participants Memorandum (APM) to address liquidity issues related to the impacts of COVID-19.
The program is called a Pass-Through Assistance Program (PTAP) and lenders with a P&I shortfall may request Ginnie Mae advance the difference between available funds and the scheduled payment to investors.
“This PTAP will be effective immediately upon publication of the APM for Single Family program issuers, with corresponding changes made to Ginnie Mae’s MBS Guide in due course,” a release says. “We anticipate publishing PTAP terms for HMBS (reverse mortgage) and Multifamily issuers shortly thereafter.”
Issuers will be required to sign an agreement with Ginnie Mae and must repay the advance between a specific time period.
Ginnie Mae said borrowing under the PTAP should be a “last resort” to alleviate the liquidity shortage faced by issuers of Ginnie Mae.
The U.S. Department of Housing and Urban Development (HUD) announced a tailored set of mortgage relief options last week for homeowners with FHA-insured mortgages who have been impacted by COVID-19.
HUD states, effective immediately for those who cannot make mortgage payments due to the virus, servicers must extend deferred or reduced mortgage payment options for up to six and also provide an additional six months of forbearance if requested by the borrower.
This measure implements provisions contained in the CARES Act signed by President Donald Trump on March 27.
“The last thing any of us wants is for Americans to lose their homes unnecessarily while we continue to fight this invisible enemy. If you’re struggling, immediate help is now available. The FHA will continue to work with stakeholders to ensure that the loss mitigation options that are offered for both forward and reverse borrowers are appropriately tailored for the present situation,” said Dr. Benjamin Carson, Secretary of HUD.