Economy

Mortgage servicers need direction from federal agencies on how to implement the forbearance plans called for in the CARES Act, according to the Community Home Lenders Association.

Weak demand for oil and gas, brought on by the economic fallout of the coronavirus outbreak, has raised concerns of energy firms missing loan payments or even going bankrupt. Here’s how banks and regulators are trying to get ahead of potential problems.

The 2008 package proved some banks were too big to fail. But the rushed $2.2 billion stimulus shows now any company can be bailed out.

Mortgage bankers are sounding alarms that the Federal Reserve's emergency purchases of bonds tied to home loans are unintentionally putting their industry at risk by triggering a flood of margin calls on hedges lenders have entered into to protect themselves from losses.

The impending wave of loan delinquencies because of the coronavirus hurt private mortgage insurer earnings, but the companies will still have sufficient capital, a Keefe, Bruyette & Woods report said.

Draw-downs on C&I credit more than quadrupled in a seven-day period ended March 25. Lenders may try to rein them in if the crisis drags out, but legal precedent isn’t on their side.

The Federal Housing Finance Agency authorized the government-sponsored enterprises to lend additional support to the mortgage-backed securities market and temporarily allow some flexibility in lending requirements to address coronavirus-related concerns.

While the mortgage market began the year healthy, lenders and borrowers need to prepare for the impacts of the coming coronavirus recession.

Refinancing activity is surging, existing borrowers are inquiring about loan modifications, loan closings are being delayed by more complex credit checks — and banks are short on people to handle it all.

Mark Calabria said Fannie Mae and Freddie Mac are currently equipped to handle elevated delinquencies, but they might need congressional or Federal Reserve help if fallout from the coronavirus persists.