March 24th, 2020 9:32 AM by Richard Sardella MLO.100007700/NMLS 233568
Foreclosures and evictions to cease across the US for 60 days
It’s hard to find anything that isn’t affected by the pandemic these days. Many people whose incomes are compromised because of an interruption of income also own homes, and no one wants to see a repeat of the foreclosure fiasco experienced little more than a decade ago. For that reason, the White House ordered foreclosures and evictions to cease for 60 days across the U.S.
Officials urged struggling homeowners to contact their loan services about forbearance on loans. BankRate’s Natalie Campisi reports that Ally Bank announced its 120-day mortgage payment moratorium, and Bank of America said it would suspend mortgage payments for eligible borrowers. And the Federal Housing Finance Agency (FHFA), Housing and Urban Development (HUD), United States Department of Agriculture (USDA), Fannie Mae and Freddie Mac all have announced a freeze on foreclosures and evictions for at least 60 days as well as forbearance or disaster relief options for homeowners who can’t afford their mortgage payments.
The two agencies that back about half of all mortgages in the US (Freddie Mac and Fannie Mae) have also said they would allow forbearance options to borrowers affected by the pandemic. “Forbearance means your mortgage payments can be suspended for up to 12 months because of economic hardship that was caused by the coronavirus outbreak,” says Campisi. “If this were a typical economic downturn, there would be a daisy-chain reaction that would lead to evictions, landlords collecting less rent, lenders losing money, and foreclosures. But with officials working in concert on a plan that makes sense for everyone, this kind of chain reaction can be avoided.”
She goes on to say that part of the reason the swift action is possible is that lenders are using existing programs as stopgap solutions, such as disaster relief. But they’re also working on a more streamlined assistance program that would help borrowers as long as COVID-19 is disrupting business and ending paychecks for millions of Americans.
In the meantime, homeowners and buyers alike should not be discouraged from borrowing to refinance or to purchase, especially in the face of such historically low rates. Ed DeMarco, president of the Housing Policy Council and the former head of the FHFA, says, “It is critical that we continue to process new mortgage applications, including refinances, in the face of the low-rate environment,” DeMarco says. “That itself is an economic stimulus.”
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Lower
Mortgage rates are moving lower so far today. The MBS market improved by +11 bps last week. This caused rates or fees to mostly move sideways for the week. The rates experienced extreme volatility last week.
This Week's Rate Forecast: Lower
Three Things: These are the three areas that can impact rates this week. 1) Coronavirus, 2) The Fed, and 3) Stimulus
1) Coronavirus: This is, of course, driving the other two items. Here are the most recent headlines that are impacting long bond traders.
2) The Fed: The Fed has been taking daily action for the past week. This week starts with a massive move as they essentially announced unlimited QE. They will start with $50 billion of agency MBS purchases (at least) every day this week. They are also purchasing $75B of Treasuries, but that has less of an impact on mortgage rates.
3) Stimulus: The Senate failed to pass anything over the weekend as there are very different opinions on how the stimulus should be applied to private companies and individuals. The stimulus started as about an $850B package a week ago, then was around $1.3T, and now could hit $2.0T. The Senate has scheduled another vote for noon on Monday.
This Week's Potential Volatility: High
The coronavirus is affecting every facet of the market, including the Fed's actions and stimulus. Look for volatility this week to remain at extreme levels and almost entirely dictated by the above three items.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
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