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MBS Day Ahead: No Grand Mortgage Market Backstop = No Surprise

Posted To: MBS Commentary

Given the size and scope of the unemployment/forbearance issue, mortgage investors have been rightfully concerned about the timeliness of payments, and perhaps even the solvency of existing mortgage market backstops (servicer balance sheets and Fannie/Freddie/Ginnie). Even if they could count on servicers and agencies keeping payments flowing, there would still be questions about the value and saleability of forbearance loans. The nature of the issue was/is so obvious that even a US Congressperson could understand it! That's why the first draft of the CARES Act included a servicer backstop provision via the Fed's 13(3) emergency lending powers. This was cut in the Senate/final version of the bill and thus began the outcry from the mortgage industry. I've expressed plenty of my own…(read more)

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