A report by Bloomberg said while the government took control of Fannie Mae and Freddie Mac during the last downturn, the GSEs are “now at the heart” of the government’s effort to assist homeowners, lenders, and servicers during COVID-19.
Anthony Sanders, a finance professor at George Mason University, told Bloomberg, “the private market can’t save us.”
“The tides have changed dramatically. Now we realize without Fannie and Freddie, we’d be in a world of hurt, because who else is going to buy these mortgages?” Sanders said.
Bloomberg added that government control of the GSEs allowed Congress a tool to provide economic relief quickly, mostly through forbearance plans where borrowers can delay or make reduced payments.
Black Knight reported that delinquent mortgages rose by 1.6 million in April—the largest monthly gain ever recorded. The national delinquency rate nearly doubled to 6.45% from March—the largest single-month increase ever recorded—and nearly three times the previous record for a single month from back in late 2008.
“The fact that 70% of the market is federally backed has made this experience far less gruesome than it could have been,” said Julia Gordon, President of the National Community Stabilization Trust to Bloomberg. “As imperfect as it is, we’re still in a better place than we were in 2007.”
The Federal Housing Finance Agency (FHFA) announced foreclosure and evictions supported by the GSE will be extended to June 30.
Deadlines for all foreclosure and eviction moratoriums were set to expire on May 17.
“During this national health emergency, no one should be forced from their home," said FHFA Director Dr. Mark A. Calabria. “Extending the foreclosure and eviction moratoriums protects homeowners and renters with an Enterprise-backed mortgage and provides certainty for families.”
This announcement came shortly after the FHFA announced new payment deferral options for loans backed by Fannie Mae and Freddie Mac. Borrowers now have the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity.
Servicers will begin offering deferral payment options beginning July 1, 2020, according to the FHFA.