NRZ I saw this comment about NRZ on SA. Does anyone know if this is true. It would certainly help explain the huge price drop in NRZ which continues today:
In a nutshell:
"Last week the regulator for mortgage giants Fannie Mae and Freddie Mac announced a forbearance program for borrowers unable to pay their loans because of the effects of the coronavirus.
The Department of Housing and Urban Development, which includes the FHA loan program, announced the same. That is a huge relief for borrowers, who can now delay payments without penalty. Unfortunately there’s a hitch.
The mortgage servicers, the companies that collect monthly payments, are required to pass those payments on to the investors who own those loans in mortgage-backed securities even if the borrowers don’t pay. Servicers also have to pay insurers and tax authorities.
Under normal circumstances, servicers have the cash reserves to do this if just a few borrowers don’t pay, but the industry is now looking at a potentially unprecedented wave of missed mortgage payments."
23 Mar 2020, 06:57 PM
