FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[Luke 532]

It's very nice that Calabria is standing up for FnF.  However there's almost no chance he is going to be able to withstand the pressure aimed at him.

 

I strongly disagree.  Calabria isn't alone on an island in this, Powell and Mnuchin are standing right beside him.

[investorG]

It's very nice that Calabria is standing up for FnF.  However there's almost no chance he is going to be able to withstand the pressure aimed at him.

 

I strongly disagree.  Calabria isn't alone on an island in this, Powell and Mnuchin are standing right beside him.

 

Ok we will see.  But as I see it here's whats happening at the moment:  MBA chairman calls Kudlow and explains (correctly) how Calabria's actions are tightening the mortgage market and hurting the economy.  Kudlow tells Trump.  Trump asks (perhaps not politely) Mnuchin wtf and then Mnuchin addresses the situation.    Or, hopefully, Mnuchin is 1 step ahead and his plan was to build pressure and then address this in a fair way.

[orthopa]

@orthopa

 

well, first HL and Milbank must do their work.  these are top flight advisors who are used to expedited schedules, but I dont think fhfa has put them on a particularly expedited schedule...plus shelter in place will slow down their work just a tad. 

 

second, I do believe that treasury is looking for political cover, and in my view seila will provide that if cfpb is ruled unconstitutionally structured and the seila CID is vacated.  seila will be the perfect opportunity for Milbank to tell fhfa that it is f*cked if that ruling comes down as I expect.

 

third, the capital rule should be reviewed very carefully by HL before it is issued so that it is financeable.

 

and now fourth, GSEs have to be viewed as part of the housing finance solution and not just a piggyback. and there are promising signs of that emerging...eg, this new lenders letter which says that GSEs will buy newly originated loans in forbearance, but at a pricing discount.

 

large shareholders and Ps have had no one to talk to about settlement, so there was no path to settlement.  now at some point, I expect HL and Milbank will formulate a common ground between them that can accommodate a substantive negotiation with large shareholders.  you could not have this negotiation with fhfa counsel who, I am guessing, leaves the office at 4:50pm to beat the evening rush hour.

 

Great explanation thanks.

[Guest cherzeca]

It's very nice that Calabria is standing up for FnF.  However there's almost no chance he is going to be able to withstand the pressure aimed at him.

 

I strongly disagree.  Calabria isn't alone on an island in this, Powell and Mnuchin are standing right beside him.

 

Ok we will see.  But as I see it here's whats happening at the moment:  MBA chairman calls Kudlow and explains (correctly) how Calabria's actions are tightening the mortgage market and hurting the economy.  Kudlow tells Trump.  Trump asks (perhaps not politely) Mnuchin wtf and then Mnuchin addresses the situation.    Or, hopefully, Mnuchin is 1 step ahead and his plan was to build pressure and then address this in a fair way.

 

nope.  housing finance is small potatoes when you are doling out a trillion in a month to small businesses. and not so small businesses.  if you were right investorG, you wouldn't have had Stevens and Whalen squealing like stuck pigs for the past month, and the servicers would have had a fed facility from the get go.  you are an MBA-er in drag, right investorG? 

[investorG]

It's very nice that Calabria is standing up for FnF.  However there's almost no chance he is going to be able to withstand the pressure aimed at him.

 

I strongly disagree.  Calabria isn't alone on an island in this, Powell and Mnuchin are standing right beside him.

 

Ok we will see.  But as I see it here's whats happening at the moment:  MBA chairman calls Kudlow and explains (correctly) how Calabria's actions are tightening the mortgage market and hurting the economy.  Kudlow tells Trump.  Trump asks (perhaps not politely) Mnuchin wtf and then Mnuchin addresses the situation.    Or, hopefully, Mnuchin is 1 step ahead and his plan was to build pressure and then address this in a fair way.

 

nope.  housing finance is small potatoes when you are doling out a trillion in a month to small businesses. and not so small businesses.  if you were right investorG, you wouldn't have had Stevens and Whalen squealing like stuck pigs for the past month, and the servicers would have had a fed facility from the get go.  you are an MBA-er in drag, right investorG?

 

nope.  not even close. 

 

where I differ from consensus here is: a) while admirable I think Calabria (publicly) is doing solid work in the trees while missing the forest, b) I think the macro situation leans toward Layton and a much later potential re-IPO time line and c) I'm paying attention to Seila and won't put my head in sand over Calabria's potential short tenure. 

 

If we don't strike a good decent deal right now the great deal many hope for may never come. 

[Luke 532]

...Stevens and Whalen squealing like stuck pigs for the past month...

 

Take 20 minutes and enjoy :-)  This is from earlier today...

https://thenationalrealestatepost.com/breaking-news-david-stevens-fhfa-is-creating-a-crisis/

 

Few quotes from David Stevens and the interviewer, Brian Stevens:

"I don't know if it's intentional obstruction or sabotage."

"(Calabria) thinks these are private companies."

"They are willingly and knowingly creating a crisis because we've explained all of this to them."

"Chris whalen called for (Calabria) to be fired"

"Calabria is not only thumbing his nose, he's screwing all of us in the business."

"This is a time for war."

[orthopa]

...Stevens and Whalen squealing like stuck pigs for the past month...

 

Take 20 minutes and enjoy :-)  This is from earlier today...

https://thenationalrealestatepost.com/breaking-news-david-stevens-fhfa-is-creating-a-crisis/

 

Few quotes from David Stevens and the interviewer, Brian Stevens:

"I don't know if it's intentional obstruction or sabotage."

"(Calabria) thinks these are private companies."

"They are willingly and knowingly creating a crisis because we've explained all of this to them."

"Chris whalen called for (Calabria) to be fired"

"Calabria is not only thumbing his nose, he's screwing all of us in the business."

"This is a time for war."

 

Wow. Well no question there is some friction between Calabria/MBA,Stevens crowd. My intuition leads me to believe Calabria is a stickler and doing what HERA says he has to do but seeing Ginnies actions the realist in me sees that this is a bit of a middle finger to the same group.

 

It seems that Calabria is very determined to get FnF out of conservatorship and this is another example of this. At some point in the video Stevens says that Treasury has access to 240B of capital and although I think he confuses liquidity and capital it seems that Calabria is HEAVILY against anything that would affect the deleveraging of FnF. Although things have been delayed to our dissatisfaction it feels that there is a time table being followed as capital build and capital preservation is of very high priority to meet levels before a consent decree.

 

Although disappointing I think Calabria's comment that this may only delay offering by a couple months also shows a semi rigid plan that will be adhered to.  He could have easily said all projections are offerings are off the table due to uncertainty. Instead his comments showed determination.

 

With the way these mortgages in forbearance are going to be treated in the MBS pool are we even going to see loss reserves built up at FnF in the coming months? It seems to me the treatment preserves the capital build and pushes the effects into a time period (12 months from now) after capital build has met minimal levels and a consent decree has been enacted. This eliminates a hurdle caused by this crisis.

 

Thoughts?

[investorG]

...Stevens and Whalen squealing like stuck pigs for the past month...

 

Take 20 minutes and enjoy :-)  This is from earlier today...

https://thenationalrealestatepost.com/breaking-news-david-stevens-fhfa-is-creating-a-crisis/

 

Few quotes from David Stevens and the interviewer, Brian Stevens:

"I don't know if it's intentional obstruction or sabotage."

"(Calabria) thinks these are private companies."

"They are willingly and knowingly creating a crisis because we've explained all of this to them."

"Chris whalen called for (Calabria) to be fired"

"Calabria is not only thumbing his nose, he's screwing all of us in the business."

"This is a time for war."

 

Wow. Well no question there is some friction between Calabria/MBA,Stevens crowd. My intuition leads me to believe Calabria is a stickler and doing what HERA says he has to do but seeing Ginnies actions the realist in me sees that this is a bit of a middle finger to the same group.

 

It seems that Calabria is very determined to get FnF out of conservatorship and this is another example of this. At some point in the video Stevens says that Treasury has access to 240B of capital and although I think he confuses liquidity and capital it seems that Calabria is HEAVILY against anything that would affect the deleveraging of FnF. Although things have been delayed to our dissatisfaction it feels that there is a time table being followed as capital build and capital preservation is of very high priority to meet levels before a consent decree.

 

Although disappointing I think Calabria's comment that this may only delay offering by a couple months also shows a semi rigid plan that will be adhered to.  He could have easily said all projections are offerings are off the table due to uncertainty. Instead his comments showed determination.

 

With the way these mortgages in forbearance are going to be treated in the MBS pool are we even going to see loss reserves built up at FnF in the coming months? It seems to me the treatment preserves the capital build and pushes the effects into a time period (12 months from now) after capital build has met minimal levels and a consent decree has been enacted. This eliminates a hurdle caused by this crisis.

 

Thoughts?

 

Yes.  A material reserve build is likely this year and earnings will drop, perhaps by a tremendous amount.  Same with other financial institutions.  It would have been far worse near term without the forbearance language in CARES act, a Tsy draw would have likely been certain instead of possible.

[Guest cherzeca]

It's very nice that Calabria is standing up for FnF.  However there's almost no chance he is going to be able to withstand the pressure aimed at him.

 

I strongly disagree.  Calabria isn't alone on an island in this, Powell and Mnuchin are standing right beside him.

 

Ok we will see.  But as I see it here's whats happening at the moment:  MBA chairman calls Kudlow and explains (correctly) how Calabria's actions are tightening the mortgage market and hurting the economy.  Kudlow tells Trump.  Trump asks (perhaps not politely) Mnuchin wtf and then Mnuchin addresses the situation.    Or, hopefully, Mnuchin is 1 step ahead and his plan was to build pressure and then address this in a fair way.

 

nope.  housing finance is small potatoes when you are doling out a trillion in a month to small businesses. and not so small businesses.  if you were right investorG, you wouldn't have had Stevens and Whalen squealing like stuck pigs for the past month, and the servicers would have had a fed facility from the get go.  you are an MBA-er in drag, right investorG?

 

nope.  not even close. 

 

where I differ from consensus here is: a) while admirable I think Calabria (publicly) is doing solid work in the trees while missing the forest, b) I think the macro situation leans toward Layton and a much later potential re-IPO time line and c) I'm paying attention to Seila and won't put my head in sand over Calabria's potential short tenure. 

 

If we don't strike a good decent deal right now the great deal many hope for may never come.

 

Agree with this except for last sentence. I am looking for a release into consent phase rather than the re-iPo. I see the latter depending on market conditions and former depending on cap rule, and many factors such as GSE delinquency rates, capital level etc. I am willing to wait awhile for latter, and less than awhile for former

[investorG]

 

Agree with this except for last sentence. I am looking for a release into consent phase rather than the re-iPo. I see the latter depending on market conditions and former depending on cap rule, and many factors such as GSE delinquency rates, capital level etc. I am willing to wait awhile for latter, and less than awhile for former

 

Hard for him to write a consent decree later in 2020 when 15-25pct+ of the loans are in forbearance.  Hard to re-IPO in 2021 when cure rates and initial performance results coming off that base are still inconclusive.  As Calabria said 1 month ago, if the forbearance rates start accelerating from his benign initial assessment he'll adjust his mentality (which at the time was just a couple months delay in the re-IPO).  Balloon catchup payments (from wsj article this AM) will start to become a dirty word and once that happens and the bottlenecks subside, the numbers will likely keep rising, especially in the final weeks of the program (either end of 2020 or hopefully sooner when Prez pre-announces the end to the emergency period).  A 12 month Forbearance is too generous of a plan to pass up for many struggling Americans.

[Guest cherzeca]

 

Agree with this except for last sentence. I am looking for a release into consent phase rather than the re-iPo. I see the latter depending on market conditions and former depending on cap rule, and many factors such as GSE delinquency rates, capital level etc. I am willing to wait awhile for latter, and less than awhile for former

 

Hard for him to write a consent decree later in 2020 when 15-25pct+ of the loans are in forbearance.  Hard to re-IPO in 2021 when cure rates and initial performance results coming off that base are still inconclusive.  As Calabria said 1 month ago, if the forbearance rates start accelerating from his benign initial assessment he'll adjust his mentality (which at the time was just a couple months delay in the re-IPO).  Balloon catchup payments (from wsj article this AM) will start to become a dirty word and once that happens and the bottlenecks subside, the numbers will likely keep rising, especially in the final weeks of the program (either end of 2020 or hopefully sooner when Prez pre-announces the end to the emergency period).  A 12 month Forbearance is too generous of a plan to pass up for many struggling Americans.

 

you are entitled to your opinion but the current fact is that 4.9% of GSE loans are in forbearance.  you can pray at Zandi's altar but not without my calling you out.  as for balloon payments, that wouldn't be best servicer practices, and that would get servicers in some hot PR water.  and anecdotally I have heard no one is offering 12 months up front...more common is 3-4 months...but yes this is unchartered waters

[TwoCitiesCapital]

 

Agree with this except for last sentence. I am looking for a release into consent phase rather than the re-iPo. I see the latter depending on market conditions and former depending on cap rule, and many factors such as GSE delinquency rates, capital level etc. I am willing to wait awhile for latter, and less than awhile for former

 

Hard for him to write a consent decree later in 2020 when 15-25pct+ of the loans are in forbearance.  Hard to re-IPO in 2021 when cure rates and initial performance results coming off that base are still inconclusive.  As Calabria said 1 month ago, if the forbearance rates start accelerating from his benign initial assessment he'll adjust his mentality (which at the time was just a couple months delay in the re-IPO).  Balloon catchup payments (from wsj article this AM) will start to become a dirty word and once that happens and the bottlenecks subside, the numbers will likely keep rising, especially in the final weeks of the program (either end of 2020 or hopefully sooner when Prez pre-announces the end to the emergency period).  A 12 month Forbearance is too generous of a plan to pass up for many struggling Americans.

 

I thought the approved package was 3-4 month forbearance? Have seen 12-month forebearance proposed/passed? At that point we should just call it what it is - default. Like any other economic cycle.

 

The 3-4 months made sense was because the economic closure that prevents some from working is gov't instituted and temporary. 3-4 months is expected to the be time frame where it's reasonably expected that those people will be cash flowing again. If that assumption is wrong, then the mortgage is now in default like it would be in any other economic scenario where you can't pay your bills for a year and should be better left to collateral liquidation and bankruptcy restructuring like any other economic downturn.

 

 

[Luke 532]

The US has no plans to create a lifeline for mortgage servicers, Mnuchin told me in a phone interview today

Ginnie Mae, FHFA actions earlier this month are enough to "deal with liquidity concerns," he said

More on @TheTerminal

[allnatural]

Seems like Calabria and Mnuchin are on the same page regarding servicers.

 

(Bloomberg) --Treasury Secretary Steven Mnuchin said the U.S. has no current plans to create a Federal Reserve facility to inject funding into non-bank mortgage servicers, as recent government moves will help the firms get through the risk of millions of borrowers missing their mortgage payments.

Mnuchin pointed to Ginnie Mae’s decision last month to facilitate payments to mortgage bondholders themselves, thus covering an obligation that would have fallen on servicers. That combined with steps taken this week by the Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac, will “deal with liquidity concerns,” he said in a Bloomberg News interview on Thursday.

 

“We’re not looking at a Fed facility for this at this time,” Mnuchin said. “The moves that both regulators have just taken are more than sufficient to create liquidity.”

 

The Treasury Secretary and other government officials have been under pressure to bail out servicers, companies that collect monthly payments from borrowers and then funnel money to investors in securities made up of home loans.

 

The firms are still obligated to pay bondholders even if homeowners go into forbearance, prompting the industry to argue that thinly-capitalized nonbank servicers could go under if swaths of borrowers stop paying. Mortgage lenders have argued that such a scenario could trigger the collapse of the U.S. housing market.

 

Despite that concern, Mnuchin said the firms do not pose a systemic risk to the financial system.

 

The FHFA tried to ease strains on servicers Wednesday by announcing that it would allow Fannie and Freddie to buy new loans that have just entered forbearance. It also said that servicers handling Fannie-backed loans would only have to facilitate borrowers’ missed payments to bond investors for four months, bringing it in-line with Freddie.

[Luke 532]

The US has no plans to create a lifeline for mortgage servicers, Mnuchin told me in a phone interview today

Ginnie Mae, FHFA actions earlier this month are enough to "deal with liquidity concerns," he said

More on @TheTerminal

 

Haha!  They might provide one for oil companies.  Rubbing it in the faces of servicers!  LOL

Mnuchin tells @SalehaMohsin he’s considering a lending facility for oil companies that aren’t creditworthy enough to get loans directly from the Fed. Doesn’t elaborate much, but says he’s discussing “alternative structures with banks.”

[Luke 532]

Seems like Calabria and Mnuchin are on the same page regarding servicers.

 

ACG: "Calabria, Mnuchin and Powell have a very good relationship, one team, no distance, no friction."

[Guest Covid-19_Survivor]

 

Agree with this except for last sentence. I am looking for a release into consent phase rather than the re-iPo. I see the latter depending on market conditions and former depending on cap rule, and many factors such as GSE delinquency rates, capital level etc. I am willing to wait awhile for latter, and less than awhile for former

 

Hard for him to write a consent decree later in 2020 when 15-25pct+ of the loans are in forbearance.  Hard to re-IPO in 2021 when cure rates and initial performance results coming off that base are still inconclusive.  As Calabria said 1 month ago, if the forbearance rates start accelerating from his benign initial assessment he'll adjust his mentality (which at the time was just a couple months delay in the re-IPO).  Balloon catchup payments (from wsj article this AM) will start to become a dirty word and once that happens and the bottlenecks subside, the numbers will likely keep rising, especially in the final weeks of the program (either end of 2020 or hopefully sooner when Prez pre-announces the end to the emergency period).  A 12 month Forbearance is too generous of a plan to pass up for many struggling Americans.

 

I thought the approved package was 3-4 month forbearance? Have seen 12-month forebearance proposed/passed? At that point we should just call it what it is - default. Like any other economic cycle.

 

The 3-4 months made sense was because the economic closure that prevents some from working is gov't instituted and temporary. 3-4 months is expected to the be time frame where it's reasonably expected that those people will be cash flowing again. If that assumption is wrong, then the mortgage is now in default like it would be in any other economic scenario where you can't pay your bills for a year and should be better left to collateral liquidation and bankruptcy restructuring like any other economic downturn.

 

The coverage period ends on either a) termination date of the national emergency or b) December 31, 2020, whichever comes first. During this period, a borrower may request 6 months forbearance with a simple request. Following that 6 months borrower may then request another 6 months.

 

So, worst case assuming national emergency is not called off this year - which is possible because president may wait for a vaccine or highly effective therapeutic first - from March 27, 2020 until December 30, 2021 we will have a varying number of borrowers not paying their mortgage. As far as the small percentage of borrowers presently taking advantage of this program, I'm sure that's because they're either not aware or their servicer is delaying. I know this, if I didn't own my home I certainly would take advantage of this hand-out. It would actually be dumb not to.

 

[Guest cherzeca]

what I dont know is what will happen when mortgages in forbearance hit the end of the initial forbearance period, say 4 months.  will many servicers demand immediate catch up payment?  will fhfa permit this? I assume fhfa has power to dictate practices to servicers since they are operating under sub servicing agreements with GSEs. will a high % of these mortgages become delinquent at this time...I wouldn't think so because CARES specifically calls for extension of addition forbearance periods.  so one would think that all (?) loans in forbearance can continue in forbearance and not pose an immediate repurchase obligation to GSE. so I am not sure how or when the GSE repurchase obligation becomes a real problem until at some point in the future when, hopefully, mortgagors get re-employed and get back into current pay on their loans.  and I haven't read anybody who has been asking and answering these questions.

[investorG]

Seems like Calabria and Mnuchin are on the same page regarding servicers.

 

(Bloomberg) --Treasury Secretary Steven Mnuchin said the U.S. has no current plans to create a Federal Reserve facility to inject funding into non-bank mortgage servicers, as recent government moves will help the firms get through the risk of millions of borrowers missing their mortgage payments.

Mnuchin pointed to Ginnie Mae’s decision last month to facilitate payments to mortgage bondholders themselves, thus covering an obligation that would have fallen on servicers. That combined with steps taken this week by the Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac, will “deal with liquidity concerns,” he said in a Bloomberg News interview on Thursday.

 

“We’re not looking at a Fed facility for this at this time,” Mnuchin said. “The moves that both regulators have just taken are more than sufficient to create liquidity.”

 

The Treasury Secretary and other government officials have been under pressure to bail out servicers, companies that collect monthly payments from borrowers and then funnel money to investors in securities made up of home loans.

 

The firms are still obligated to pay bondholders even if homeowners go into forbearance, prompting the industry to argue that thinly-capitalized nonbank servicers could go under if swaths of borrowers stop paying. Mortgage lenders have argued that such a scenario could trigger the collapse of the U.S. housing market.

 

Despite that concern, Mnuchin said the firms do not pose a systemic risk to the financial system.

 

The FHFA tried to ease strains on servicers Wednesday by announcing that it would allow Fannie and Freddie to buy new loans that have just entered forbearance. It also said that servicers handling Fannie-backed loans would only have to facilitate borrowers’ missed payments to bond investors for four months, bringing it in-line with Freddie.

 

'at this time'

 

the pressure will likely continue to build.

 

Tim howard says IPO less likely.

 

It's a good proposition to use freshly capitalized GSEs for American and political purposes but Calabria is right they don't have the capital to do so currently.  A potential creative solution is out there that does not involve the over-stretched Fed nor PSPA capital. 

[TwoCitiesCapital]

what I dont know is what will happen when mortgages in forbearance hit the end of the initial forbearance period, say 4 months.  will many servicers demand immediate catch up payment?  will fhfa permit this? I assume fhfa has power to dictate practices to servicers since they are operating under sub servicing agreements with GSEs. will a high % of these mortgages become delinquent at this time...I wouldn't think so because CARES specifically calls for extension of addition forbearance periods.  so one would think that all (?) loans in forbearance can continue in forbearance and not pose an immediate repurchase obligation to GSE. so I am not sure how or when the GSE repurchase obligation becomes a real problem until at some point in the future when, hopefully, mortgagors get re-employed and get back into current pay on their loans.  and I haven't read anybody who has been asking and answering these questions.

 

Seems like there is a lot of mixed info out there. I've basically only heard forbearance for the 3-month term afterwhich an extension of mortgage modification could be requested.

 

As for as when the forbearance is due, I've read a ton of articles that say either at the end of the 3-month period and a ton of articles that say they tack an additional 3-months onto your mortgage. I've also read a ton of articles where consumers are being told both of those things by their banks depending on who they're talking to.

 

It really doesn't seem like ANYONE knows when the money will be due to be repaid at this point, but I imagine there will be some clarity once they've had some time.

 

For an example, see this article from the WSJ

 

https://www.wsj.com/articles/getting-a-mortgage-payment-break-isnt-the-boon-many-expected-11587634200

 

[Midas79]

Clarity is absolutely needed. I don't think the CARES Act specified whether servicers are allowed to ask for the forborne (is that right?) payments as a lump sum at the end of forbearance. Perhaps they were counting on incentives; a wave of delinquencies helps noone and gives all parties involved a reason to iron something out.

 

I don't think there's much of a chance of the forbearances lasting all the way through the end of 2021, though. After the initial forbearance period the borrower actually does have to assert economic hardship to get the extra 6 months, presumably with penalties for fraud.

 

Unfortunately, it seems that at least some servicers have taken to threatening forbearance requesters with balloon payments later to save their own asses. I do think the servicers will need a liquidity line soon, if for no other reason than to stop doing this. As long as it's from the Fed, while leaving FnF out of it, I don't have a problem.

[Wiggins]

GSE shareholders are omnipresent on Twitter and elsewhere. They're viewed as enthusiastic sources of capital at this point, for companies that are bulwarks of the housing finance system. The tides have turned.

[Guest Covid-19_Survivor]

Clarity is absolutely needed. I don't think the CARES Act specified whether servicers are allowed to ask for the forborne (is that right?) payments as a lump sum at the end of forbearance. Perhaps they were counting on incentives; a wave of delinquencies helps noone and gives all parties involved a reason to iron something out.

 

I don't think there's much of a chance of the forbearances lasting all the way through the end of 2021, though. After the initial forbearance period the borrower actually does have to assert economic hardship to get the extra 6 months, presumably with penalties for fraud.

 

Unfortunately, it seems that at least some servicers have taken to threatening forbearance requesters with balloon payments later to save their own asses. I do think the servicers will need a liquidity line soon, if for no other reason than to stop doing this. As long as it's from the Fed, while leaving FnF out of it, I don't have a problem.

 

"After the initial forbearance period the borrower actually does have to assert economic hardship to get the extra 6 months"

Nowhere in the CARES act is that asserted, nor implied.

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text?q=product+update

 

"Unfortunately, it seems that at least some servicers have taken to threatening forbearance requesters with balloon payments later to save their own asses"

 

Probably correct. You know when this situation is going to blow up on MBA? When a National rag exposes the disservice WFC, for example, is doing to its borrowers. Then America will become aware of the freebee. Then it will no longer be a 5% problem.

 

 

[Guest Covid-19_Survivor]

GSE shareholders are omnipresent on Twitter and elsewhere. They're viewed as enthusiastic sources of capital at this point, for companies that are bulwarks of the housing finance system. The tides have turned.

 

LOL

 

Ask the next tweet why they're not buying.

[Midas79]

"After the initial forbearance period the borrower actually does have to assert economic hardship to get the extra 6 months"

Nowhere in the CARES act is that asserted, nor implied.

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text?q=product+update

 

You linked to the wrong version; yours doesn't have any mention of forbearance at all; a search for "forbearance" yielded no results. Instead of S 3548, you should refer to HR 748, which is the version that was passed into law, and says in Section 4022:

 

(b) Forbearance.—

 

(1) IN GENERAL.—During the covered period, a borrower with a Federally backed mortgage loan experiencing a financial hardship due, directly or indirectly, to the COVID–19 emergency may request forbearance on the Federally backed mortgage loan, regardless of delinquency status, by—

 

(A) submitting a request to the borrower’s servicer; and

 

(B) affirming that the borrower is experiencing a financial hardship during the COVID–19 emergency.

 

(2) DURATION OF FORBEARANCE.—Upon a request by a borrower for forbearance under paragraph (1), such forbearance shall be granted for up to 180 days, and shall be extended for an additional period of up to 180 days at the request of the borrower, provided that, at the borrower’s request, either the initial or extended period of forbearance may be shortened.

https://www.congress.gov/bill/116th-congress/house-bill/748/

 

I will admit that the penalty for lying about a hardship is my own assumption. However, if there was no need for assertion or documentation of any kind as to economic hardship, I don't think (B) would have been there at all.

 

I am clearly not the only one that interpreted this the way I did, for example:

 

Second, if you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request an extension for up to another 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.

https://www.consumerfinance.gov/about-us/blog/guide-coronavirus-mortgage-relief-options/