Tell Congress: Require the GSEs and FHA to Purchase and Insure Loans in Early Forbearance
Dear MAA members,
In the Senate, Senator Bob Menendez (D-NJ) introduced S. 4260, the Promoting Access to Credit for Homebuyers Act, and in the House, Representative Juan Vargas (D-CA) introduced the Promoting Access to Credit for Homebuyers Act (H.R. 6794) to mitigate the economic impact of COVID-19 on the housing market and protect borrowers from additional pricing constraints on their mortgage loans. MBA supports S. 4260 and H.R. 6794 as they would not only promote continued access to credit for homebuyers, but also ensure the continued smooth functioning of the secondary mortgage market.
Under the bills, FHFA would direct the GSEs to purchase these loans and hold them in the GSEs’ portfolios until such time that the borrowers are making regular payments and the loans can be pooled into GSE-backed securities. With respect to the Federal Housing Administration (FHA), once a loan in early payment forbearance obtains insurance, it typically will be eligible for Ginnie Mae pooling. The benefits of a well-functioning secondary market would alleviate the concerns of lenders in the primary market, allowing them to remove credit overlays or other restrictions on product offerings.
- Why it matters: Since the passage of the CARES Act, some borrowers with recently closed loans have requested forbearance, and others are expected to do so in the near future. The existing policies at both the GSEs and FHA fall well short of helping all homeowners who have a hardship caused by the COVID-19 emergency and make many such loans effectively unsalable in the secondary market, depriving the economy of critically needed stimulus through cash-out refinances to creditworthy homeowners.
- What’s next: In the House, the bill’s sponsors are advocating the legislation’s inclusion in the next coronavirus relief package. In the Senate, the legislation was referred to the Senate Banking Committee for further consideration. MBA will be working to advance both important bills.
- What you can do: Thanks to your advocacy, MAA members have already contacted 320 House offices, helping to support our lobbying efforts and adding 16 co-sponsors to the companion House bill. Now we need your help again to put pressure on the Senate!
As a member of MAA, we need you to contact your Representative and Senators TODAY and urge them to co-sponsor H.R. 6794 and S. 4260 to support homeowners adversely impacted by this current crisis.