Bloomberg reports that the Trump administration is considering a plan to allow homeowners whose income was impacted by COVID-19 to delay mortgage payments.
The report adds a mechanism for borrowers to catch up has yet to be decided. Also, the government will have to determine how to advance money to servicers so investors in mortgage-backed securities get their guaranteed payments.
"It is essential for the administration to consider all options that protect the housing infrastructure—including the affected homeowners and families during this unprecedented health crisis," said Ed Delgado, President & CEO, Five Star Global. "The industry has the tools and the protocol in place for a rapid deployment of solutions in the event of a crisis or natural disaster. There were powerful lessons learned from the 2008 housing crisis and the bevy of natural disasters encountered in the past decade, which have sharpened the execution and delivery of immediate and long-term solutions for troubled homeowners."
Michael Fratantini, Chief Economist with the Mortgage Bankers Association, said “tens of billions” of dollars in short-term financing may be needed, according to the Bloomberg report.
“This is so big,” Fratantoni said in the Bloomberg report. “We’re thinking of the potential of several months of payments for a lot of homeowners.”
The report continues by saying the White House has been in talks with mortgage lenders to discuss their views on policy responses, according to a government official.
Bloomberg states the policy could model previous forbearance programs after natural disasters. The plan will also have to be consistent for all mortgages, including Fannie Mae, Freddie Mac, and the Federal Housing Administration.
To support homeowners and address the industry impact that COVID-19 may have, under the direction of the National Mortgage Servicing Association (NMSA), leaders from across the mortgage industry are joining forces to create the COVID-19 Mortgage Industry Task Force (ITF) to coordinate on processes, procedures, and policies related to the crisis.
Wes Iseley, Senior Managing Director, Carrington Mortgage Holdings, Chairman, NMSA, said, “It’s important during crises like this that our industry work together to help our customers in unison. It is our goal to work with the relevant government agencies in order to develop best practices that will enable all parties to get through this difficult period.”
"The industry is well-positioned to assist borrowers who are impacted by the COVID-19 virus on a case-by-case basis through well-established loss mitigation programs. Our clients can evaluate the need and provide meaningful assistance to those borrowers to preserve their ability to keep their homes," said Roy Diaz, Managing Shareholder, Diaz Anselmo Lindberg, P.A.
More than 25 mortgage banks and nonbank servicers, legal professionals, and service providers will take part in the coalition.