|10 year government bond yield||0.61%|
|30 year fixed rate mortgage||3.43%|
Stocks are higher this morning on no real news. Bonds and MBS are up.
4.4 million people filed for unemployment last week. That takes the COVID-19 tally up to 26.4 million.
Fannie Mae and Freddie Mac will now purchase loans in forbearance, provided they funded between March and May. They will incorporate a 500 basis point LLPA for first time homebuyers and 700 for everyone else. They will only buy purchase and rate / term refis, no cash outs. After 5/31 any loan in forbearance is ineligible for purchase from Fannie Mae.
The CARES Act is clear about forbearance: “If a furnisher makes an accommodation with respect to one or more payments on a credit obligation or account of a consumer, and the consumer makes the payments or is not required to make one or more payments pursuant to the accommodation, the furnisher shall (I) report the credit obligation or account as current.”
In this morning’s Federal Housing Finance Agency announcement – they are limiting otherwise saleable loans that are performing, “current” according to the law just passed, or charging exorbitant delivery fees.
This is unacceptable. These are GSE-eligible loans as they are performing/current according to the law just passed, unless they were delinquent at time of going into forbearance. The GSEs need to buy these loans and either hold them on balance sheet, or pool them in TBAs if that is an option (likely not).
Good point about the loan being current. If the law says a loan in forbearance is current, then the GSEs should treat it as such.
Meanwhile, borrowers in forbearance will get asked to repay the entire forbearance period as a lump sum, which will be pretty much impossible for anyone who had a legitimate hardship. It is looking like the CARES act forbearance will please absolutely no one.
The House looks set to pass an additional stimulus bill after Democrats agreed to table the idea of mandatory vote by mail. It has already passed the Senate.