Some benefits are materializing from Fannie Mae's pledge to limit servicers' exposure to principal-and-interest advances the way Freddie Mac does, but counterparties of both GSEs remain exposed to other concerns.
Lenders implemented stricter underwriting across all loan types in the first quarter as the pandemic upended the economy, the Federal Reserve said in its survey of loan officers.
The Home Loan bank will make zero-interest loans, match charitable donations that members make to nonprofits and small businesses, and provide additional funding for economic development grants.
Fannie Mae and Freddie Mac are now able to buy loans in forbearance to alleviate pressure on the sector, but the fees charged by the mortgage giants to assume more risk could turn away some originators.
The FHFA's director said the announcement is meant to “combat ongoing misinformation” about efforts to let homeowners skip mortgage payments due to the coronavirus pandemic.
The policy move will allow small institutions participating in the Paycheck Protection Program to pledge business loans as collateral to obtain advances.
The FHFA will allow Fannie Mae and Freddie Mac, for a limited time, to purchase loans for which the borrower has sought to postpone payments because of the economic effects of the coronavirus.
Efforts to calm lenders’ fears about coronavirus-related forbearance may not offset tightening standards, and the FHA is less likely to boost volume than it was during the financial crisis.
The agency said it is aligning policies for Fannie Mae- and Freddie Mac-backed loans in forbearance so that servicers are only responsible for advancing four months of missed payments.
The Borrower Protection Program enables the two agencies to exchange information about loss mitigation efforts and consumer complaints regarding specific servicers.
