Mortgages

Ocwen Financial has approximately $749 million of liquidity from various sources to deal with servicing issues arising from the coronavirus, a company press release said.

Nonbank financial firms spent years lobbying against tougher regulation and stricter capital requirements, arguing they didn't pose a risk to the financial system. Now, many of those companies say they are in desperate need of a bailout.

Mortgage lenders are preparing for the biggest wave of delinquencies in history. If the plan to buy time works, they may avert an even worse crisis: Mass foreclosures and mortgage market mayhem.

Bank of America said it has agreed to allow 50,000 mortgage customers to defer payments for three months because they've lost income as a result of the pandemic.

Federal Housing Finance Agency Director Mark Calabria said a virus-induced financial crisis might give rise to more delinquencies and foreclosures than the 2007 subprime mortgage meltdown.

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.

The agency has relaxed some reporting requirements and joined other regulators in encouraging banks to help borrowers, but pressure is building on the bureau to do more to aid consumers suffering financial hardship.

Homeowners reeling from coronavirus-induced economic shock are already enduring extremely long wait times while trying to get relief. Legislation passed last week could worsen the logjams.

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.

Two Harbors, a real estate investment trust, sold the bulk of its nonagency mortgage-backed securities portfolio to head off margin calls and refocus on its more favorable agency-MBS investments.

With seven in 10 rooms sitting empty amid the coronavirus outbreak, hotel and banking groups are urging policymakers to open up the Term Asset-Backed Securities Loan Facility.

The regulation issued late on Tuesday directs state-regulated financial institutions to give mortgage borrowers at least 90 days of forbearance if they can show financial hardship resulting from the coronavirus pandemic. It also requires banks and credit unions to provide relief on ATM fees and credit card late payment fees.

With economists fearing high unemployment stemming from the pandemic, the housing finance system is grappling with how it will recoup lost revenue from delinquencies, forbearance plans and other tremors.

Real estate investor Tom Barrack said predicted a “domino effect” of catastrophic economic consequences if banks and government don’t take prompt action to keep commercial mortgage borrowers from defaulting.

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.

Accommodations for borrowers affected by the coronavirus pandemic, such as payment delays and fee waivers, are "positive and proactive actions that can manage or mitigate adverse impacts," the regulators said.

Additional mortgage-backed securities purchases by the Federal Reserve Bank of New York will address private investor skittishness about the asset class, but it will not necessarily lower rates.

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.