MBA Statement on FHFA’s Announcement on Advance Obligation Limits for Loans in Forbearance
|Rob Van Raaphorst|
WASHINGTON, D.C. (April 21, 2020) - MBA President and CEO Robert D. Broeksmit, CMB, released the following statement regarding the Federal Housing Finance Agency's (FHFA) announcement on advance obligation limits for loans in forbearance.
"MBA welcomes today's announcement from FHFA that caps mortgage servicers' advancing obligations at four months for Fannie Mae single-family loans, effectively mirroring Freddie Mac's requirements. This is an important step in reducing the maximum liquidity demands for servicers who are providing mortgage payment forbearance for borrowers who have a pandemic-related hardship, and we appreciate FHFA's action.
"This change limits the length of time that a servicer would need to advance principal and interest payments, but servicers are still responsible for advancing payments for property taxes, homeowners insurance, and mortgage insurance if the borrower does not pay them separately."
"While this news reduces servicers' worst-case cash flow demands considerably, we continue to stress the need for Treasury and the Federal Reserve to create a liquidity facility for those servicers who need it in order to continue to make payments to investors, municipalities, and insurers on behalf of borrowers who have been granted forbearance required under the CARES Act."