Mortgage Loan

Mortgage industry on the brink of collapse





The mortgage market is on the brink of collapse as thousands of borrowers suddenly pour into the government bailout without any proof of any hardship. CNBC’s Diana Olick reports.

A broad coalition of mortgage and finance industry leaders on Saturday sent a plea to federal regulators, asking for desperately needed cash to keep the mortgage system running, as requests from borrowers for the federal mortgage forbearance program are pouring in at an alarming rate.

The Cares Act mandates that all borrowers with government-backed mortgages — about 62% of all first lien mortgages according to Urban Institute — be allowed to delay at least 90 days of monthly payments and possibly up to a year’s worth.

Those payments would then have to be made at a later time through a payment plan. Servicers are granting the payment deferrals to borrowers with no questions asked, as is required by the law, but the servicers still have to pay mortgage bond holders.

In normal times, they have enough to cover these payments, and, in fact, at the end of last year the mortgage delinquency rate was near a record low, according to CoreLogic. Now that rate is skyrocketing, and servicers do not have nearly enough cash to cover those payments to bondholders.

The coalition, which includes the Mortgage Bankers Association, the National Association of Home Builders, the National Association of Realtors, the Independent Community Bankers of America, U.S. Mortgage Insurers and the National Apartment Association, issued a press release Saturday saying, “The scale of this forbearance program could not have been foreseen by mortgage servicers, or fully anticipated by regulators … it is therefore incumbent upon the government to provide a liquidity facility for single-family and multifamily servicers … any further delay could lead to greater uncertainty and volatility in the market.”

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32 comments

  1. Good thing I make 60k a year and live in my car 👍

    Reply
  2. She said “moral hazard “ lmao!!!! What a joke!

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  3. Taxpayer is the final backstop not the government.

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  4. Wont collapse. Government will bail them out to prevent total chaos

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  5. These events highlight over and over the lack of people saving up enough cash to last couple of months if one was to lose a job. If people had enough savings for couple of moths this would not be an issue. As well as corporations, operating on such thin margins that if someone sneezes they are pleading for a bailout. It's like everything is fine, until it isn't.

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  6. 24 months of reserves. After that my fam will be in trouble.

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  7. This is not a recession. This is a depression. Research past depressions and prepare accordingly.

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  8. Enough already! Go plant some potatoes.

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  9. Mortgages are the biggest ripoff. If housing was affordable, wouldn’t need mortgages

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  10. How dare he?! After his industry got a huge government welfare check after engaging in exploitation and speculation, he has the nerve to critique the government trying to protect ordinary citizens from his group of charlatans. Tone deaf.

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  11. Where will all this money come from? Taxpayers?

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  12. Governments shouldn’t interfere in markets. Isn’t that what you people are always rambling on about?

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  13. You do know the government is owned by the banks and lobbyists, right? You know the entire system is built on corruption and a complicit media, right? As if anyone didn't see this coming. It's deliberate. It always is. Fractional reserve banking…Rehypothecation….Derivatives, CDO's, et al. It's a shitshow for the insane. You'd have to be a conspiracy nut to believe anything the media ever says. WTC7 was fire, right, media?

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  14. How's that trickle down economy doing for the average joe? Reaganomics has destroyed the middle class. Just look at how much richer the wealthy have become since Reagan was in office.

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  15. Where are all my Make America Great Again folks? LMAOOOOO

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  16. let it collapse. I would't pay my mortgage if I had one now; Wall street lives lavishly on those payments.
    Let them starve.

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  17. Easy fix, tell the bond holders to wait.

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  18. "It seems like the government is the ultimate backstop". What? Why shouldn't the bondholders accept any responsibility?

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  19. They should have stop spending money on avocado toast 🤷🏾‍♂️

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  20. THIS ECONOMY WILL PULL THROUGH..NO WORRIES.

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  21. Find it amazing that as a human being, shouldn't everyone have saving for emergency? What make Americans can enjoy free lunch from a government has a bank balance 0 as well.

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  22. Let it BURN!!!!!!!!!

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  23. Looks like the money printing is working for now. S&P500 holding strong… we will see what happens in a few weeks.

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  24. Just push a PAUSE BOTTON DAMN. IF THEY CANT ITS BECAUSE THE DEVIL IS RUNNING THIS SH*T SHOW.

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  25. People respond to incentives. If the incentive is to have a hardship related to coronavirus, and you aren't requiring any proof of that hardship, then literally everyone will claim a hardship.

    I question how many of these forebearances would be granted if there were anyone actually verifying the need for one. Certainly some, but I bet not nearly as many.

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  26. Banks should be fine thisbis a money grab

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  27. instead of giving people forbearance give them a deduction in principle problem solved say 5% , definitely is what inflation will be this year alone . this way nobody missed a payment or at least offer the option.

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  28. The government has to bear the brunt? You mean the working people? Banks and corporations get interest free infinite money with no strings attached and the American people get $1200 to live on for the next few months….

    And yes… The American people will just keep taking it in the ass like we always do.

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  29. If no one is going work anymore, why not just forgive the loans? 😆

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  30. What ? So the banks can come and steal our homes after all this like in 08 ?

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  31. Big pump and dump going on in the stock market. Ridiculous 1200 point climb in the Dow today given the terrible long term economic fundamentals. 1:04 pm … looks pretty bad.

    Reply
  32. REMEMBER THIS NOVEMBER
    VOTE BLUE
    SAVE OUR DEMOCRACY

    Reply

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