Capital markets

Nonbank servicers have been seeking more sources of cash since the coronavirus disrupted markets and elevated forbearance rates. These are some strategies they may be able to use.

Whatever path Fannie Mae and Freddie Mac take, the Mortgage Bankers Association would like to see them preserve many of the changes they made while in government conservatorship.

The leveraged loan market, long favored by private equity firms to fund LBOs, has lagged. The largest buyers of the debt - vehicles known as collateralized loan obligations - are not purchasing as much as they used to as they deal with the wave of downgrades that has hit many of the companies they already hold.

The Federal Housing Administration's move to insure loans with forbearance could help support homeownership opportunities constrained by the coronavirus if one change was made to it, trade groups said.

If delinquency rates rise, all four stand-alone firms would have a capital shortfall.

The new FHFA rule sets a percentage-based threshold to measure compliance, rather than Home Mortgage Disclosure Act data.

Steps have been taken to manage coronavirus-related liquidity risks to the housing finance system, but some remain, according to Mortgage Bankers Association President and CEO Robert Broeksmit.

Aggregate numbers for coronavirus-related payment suspensions are showing more consistency as organizations clarify how they handle them, and some consumers' incentives to use them may be declining.

The coronavirus made it particularly tough for independent contractors and independent business owners to get home mortgages, but there are some signs that market may recover soon.

Sellers are currently willing to concede discounts of around 5%, while bidders are hoping for about 20% off pre-pandemic prices. That estimated gap, which is likely wider in specific cases, has put a freeze on deals.