Good Morning on this fantastic Thursday,
Bonds are up slightly on the day after the jobless claims release that was horrible. 6.6 million people filed for unemployment this week, which follows last week’s 3.3 million claims. Can you imagine 10mm people out of work. The number is staggering and with yesterday being April 1st, I have to wonder, how many rent and mortgage payments are not being made. This is a slippery slope for everyone. The risk to the borrowers are that the terms of repayment for forbearances are not yet known and with that, servicers could require that all delinquent payments be brought current at the end of that forbearance period. There are certainly other structures of forbearance repayment but the point is it will be painful regardless. Additionally, the servicing companies still have to meet the obligations to advance the funds to investors for P&I as well as pay the taxes and insurances when due. No payments from the borrowers and still having to make these payments is going to be difficult for most servicers. The government has not yet stepped in to address. Hopefully they will but they may wait to see who can withstand the pain and only save the strongest of companies. Until there is some relief from the government to the servicing companies, there will limited interest in purchasing loans and rates will stay elevated.
Mr. Trump released info that he spoke to Mr. Putin who agreed to pull back on Russian oil production. Oil is now up over 20%. Stocks are also in the green, all be it marginally.
FHA did come out with their version of the conventional forbearance options. Please see below for bullet points.
Loss Mitigation for Borrowers Affected by the COVID-19 National Emergency
The Mortgagee must not deny COVID-19 National Emergency Home Retention Options to Borrowers that experience an adverse impact on their ability to make on-time Mortgage Payments due to the COVID-19 National Emergency and satisfy the loss mitigation criteria set forth in this section.
Forbearance for Borrowers Affected by the COVID-19 National Emergency
If a Borrower is experiencing a financial hardship negatively impacting their ability to make on-time Mortgage Payments due to the COVID-19 National Emergency and makes a request for a forbearance, the Mortgagee must offer the Borrower a forbearance, which allows for one or more periods of reduced or suspended payments without specific terms of repayment.
The Mortgagee may utilize any available methods for communicating with a Borrower regarding a forbearance to meet these requirements. Acceptable methods of communication regarding a forbearance include, but are not limited to, emails, texts, fax, teleconferencing, websites, or sending out a general communication advising Borrowers that forbearance is granted provided the Borrower emails a request or calls their Servicer.
The initial forbearance period may be up to 6 months. If needed, an additional forbearance period of up to 6 months may be requested by the Borrower and must be approved by the Mortgagee.
The term of either the initial or the extended forbearance may be shortened at the Borrower’s request.
The Mortgagee must waive all Late Charges, fees, and penalties, if any, as long as the Borrower is on a Forbearance Plan.
FHA requires Servicers to comply with the credit reporting requirements of the Fair Credit Reporting Act (FCRA); however, FHA encourages Servicers to consider the impacts of the COVID-19 National Emergency on Borrowers’ financial situations and any flexibilities a Servicer may have under the FCRA when taking any negative credit reporting actions.
Make today great!