Economy

The policy move will allow small institutions participating in the Paycheck Protection Program to pledge business loans as collateral to obtain advances.

According to ratings agency presale reports, the small-compact tractor manufacturer is boosting overcollaterization to $22 million and a reserve account to 1% of the initial pool balance.

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.

The program, created in response to the 2008 financial crisis, generated $19 billion in small-business loans. It could be used as a viable path out of the coronavirus pandemic.

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.

Surging unemployment from COVID-19 shutdowns brought a rapidly rising tide of forbearance requests, according to the Mortgage Bankers Association.

Legislation announced Wednesday would allow credit unions to make coronavirus relief loans to businesses without fear of bumping up against the member business lending cap.

The Borrower Protection Program enables the two agencies to exchange information about loss mitigation efforts and consumer complaints regarding specific servicers.

The volume of COVID-19 forbearance requests has risen rapidly as operational processing has improved and hold times have contracted, according to the Mortgage Bankers Association.