Market Snapshot March 23, 2020
Good Monday A.M.,
Last week was a rough one. The level of illiquidity in the mortgage market (and financial markets as a whole) was so substantial that many/most non-qm and jumbo lenders have stopped lending. I don’t know I can adequately articulate how substantial of a statement that is. Companies whose sole purpose is to lend money to borrowers so they can buy or refinance their real property are so concerned about 1) having liquidity and 2) getting paid back that they stopped doing the one and only thing they are supposed to do.
The Fed recognizing the emergency here this morning announced there is now no limit to how much they will purchase to stabilize markets. I don’t know I can any better articulate how big of a deal that statement is as well. The Fed has basically backstopped every dollar in the FHA/Conventional mortgage space. Jerome Powell is my hero. Mortgage Bonds are +139bps (not a typo) and the 10-yr is back to .75%. Pricing for agency loans should start coming back in the next day or two, but if recent history tells us anything, I wouldn’t expect it all to show up in rate sheets right away.
Chuck Schumer is claiming the Covid Stimulus Bill will be approved by congress today. With that, equities are paring steep losses and are back to almost unchanged.
Last, and great news, Fannie and Freddie pledged to provide forbearance of up to 12 months to borrowers impacted by the coronavirus outbreak. Borrowers who take advantage will see their obligations suspended until their income bounces back and their payments resume. The forbearance option applies not only to primary residences, but also second home and investment properties. Following that period of forbearance, borrowers who are not back on their feet may be eligible for loan modifications, under which their monthly payments will be reduced. Fannie and Freddie both said that loan servicers are not required to obtain documentation of the economic hardships that such borrowers have suffered as a result of the pandemic. Fannie and Freddie also suspended foreclosure sales for 60 days. And they said that borrowers who are in forbearance plans as a result of the outbreak will not be negatively reported to the credit bureaus.
Please stay safe and healthy. If you are having any medical issues you think are tied to Covid-19, the number to call is 1-800-860-0620
Make today great!