|10 year government bond yield||0.75%|
|30 year fixed rate mortgage||3.37%|
Stocks are down this morning on no real news. Bonds and MBS are flattish
As the COVID-19 crisis seems to have peaked, Washington is starting to think about how to get people back to work and the economy restarted. Dr. Fauci discussed that we could start reopening parts of the economy next month, although we have seen some instances overseas where the virus re-started.
Earnings season starts this week with the big banks all reporting. Analysts don’t have a clue as to how to handle guidance in this environment. The big question with the banks will be how many borrowers are requesting forbearance. So far, no help seems to be coming, at least from Fannie and FHFA.
JP Morgan has tightened up credit requirements – instituting minimum FICOs of 700 and minimum down payments of 20%. This doesn’t apply to its low income programs (JPM doesn’t really do FHA) but this is a good indication of where things are headed across the industry. A massive tightening of mortgage credit was definitely NOT what Congress had in mind when it drafted the CARES Act, but the unintended consequences are probably not going to stop there.
Good news for Ginnie Mae servicers: Ginnie Mae will advance P&I payments for delinquent borrowers under the Pass-Through Assistance Program (PTAP). Servicers can request once per month for Ginnie to advance P&I on their MBS. Servicers would still have to handle escrows. Prepayments should help Ginnie servicers get through April, and maybe even May. It won’t solve the issue for Fannie and Freddie issuers, but it is a start.
Freddie Mac is extending further help to borrowers affected by COVID-19 including loan modifications typically only used during natural disasters.