part I once upon a time in America....the corona crisis meanwhile threatened the entire mortgage sector incl. the servicers. A thriller on the verge of a meltdown with a recalcitrant Calabria, all the other major players from FED to FDIC, again and again many statements from Jay Bray that I didn't read on any board....facts related in chronological order. WARNING : LONG. .. it starts in March 2020 when Jay Bray warned of the Liquidity Tsunami' and leads to "THE LIST" which has NATIONSTAR on it. Enjoy....
Regarding my post then : who believes that the US bailout will NOT support / cover / relieve the non banks which are in the obligation of the bonds and their investors......... who is wrong here :-) or short......For those who know, like me, that the loan & service sector is systemically important, favor the measures called for by all the experts and the FHA and the mortgage bankers association among others:
"The Fed and the Treasury Department may create a funding facility for mortgage servicers, using some of the funds earmarked in the draft coronavirus relief legislation now under discussion, writes Heights Capital Markets Edwin Groshans in a note. A liquidity facility would benefit Mr. Cooper (COOP +18.7%), PennyMac Financial (PFSI +13.5%), Ocwen Financial (OCN +7.1%), and Walker & Dunlop (WD +3.8%), as well as other companies that service Fannie-Freddie or Ginnie Mae insured MBS, he said."
Again, Mr. Cooper was mentioned : www.mortgagenewsdaily.com/channels/...20-servicing-values.aspx "....Mr. Cooper? It "will temporarily suspend participation in the GNMA Co-issue space (and) will continue to monitor the market volatility closely, and remains committed long-term to the Ginnie Mae Co-issue space. Mr. Cooper will honor & fund all currently accepted pools & at this time will not be accepting new pools." (Of course it hopes to "re-engage" in the future.)
How about the large non-bank servicers with varying degrees of capital to back varying sizes of servicing portfolios? "Mr. Cooper, the nation's third largest residential servicer, made a public plea Monday calling on policy makers in Washington...."
On 3/27/2020 the House of Representatives was deliberating on a $2 trillion aid package, the day Mnuchin said he wanted to devote all his energy to servicers...( Blackrock as administrator of the aid package, by the way, as cooperman invests with COOP and Ocwen, which just the other day outbid COOP in the loan portfolio betting )
A facility then came into play : Analysts expect the Fed will announce a facility to lend to mortgage servicers soon after the stimulus bill is enacted
The policy meant : member of the House of Representatives, Madeleine Dean said, the essence of the two-hour conversation was as follows: "Let's do it tomorrow, if possible. If not, then no later than Saturday."
3/29/2020 Jay Bray again "This week, Treasury Secretary Steven Mnuchin said a report on the mortgage bank liquidity issue could be released as early as Monday." "What needs to happen is Treasury needs to step in, like they did in the muni market and the commercial paper market," Jay Bray said. managing director of Mr. Cooper, one of the largest U.S. nonbank mortgage lenders. "We need to find financing that is affordable for the entire servicing population," Jay Bray said.
A task force was formed, but there were headwinds : www.nasdaq.com/articles/...ch-among-mortgage-firms-2020-03-27
"Should servicers start to go under, federal agencies will have to rush to find OTHER companies to take over the loans"
4/4/2020 : On April 4, 2020, a group of financial industry and housing organizations issued a joint statement calling on federal regulators to provide a LIQUIDITY SOURCE for all HYPOTHESIS SERVICERS who may need additional capacity due to homeowner and tenant forbearance.
The joint statement applauds Congressional action in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide forbearance relief for mortgage loan and rental payments, but also notes that no provision has been made for ADMINISTRATORS, who are often required to make upfront payments to investors regardless of whether mortgage payments are made
4/7/2020 ....Despite growing calls from the housing industry for a federally backed servicer liquidity facility to address the increase in forbearance due to the corona virus, Federal Housing Finance Agency Director Mark Calabria told HousingWire on Tuesday that such a facility is NOT coming. However, that doesn't mean FHFA doesn't have a plan to help SERVICERS who are in financial trouble due to early principal and interest payments to investors on loans in default...."
The dispute continued : "Other media organizations filed similar stories yesterday as well. In short, Calabria's comments were not warmly received by the Mortgage Bankers Association. While large sections of the mortgage industry were taking shots at GSE regulator Mark Calabria over his recent nonbank liquidity comments, others were in his corner. One former investment banker told IMFnews Wednesday morning that the Federal Housing Finance Agency's mission is to regulate Fannie Mae and Freddie Mac, not their seller/servicers..."
As said in several interviews, Calabria made it clear that he was more than willing to let non-banks fail, even suggesting that consumers would be better off with a bank or mega-servicer, which, by the way, was proven wrong after the Great Recession." And here they all go on Calabria :
Another source, requesting anonymity, said "if the mortgage market needs to be reassured about liquidity those calming statements should come from the Federal Reserve and/or Treasury.... Keep in mind that Treasury controls the senior preferred stock of Fannie and Freddie. If the government-sponsored enterprises go up in smoke, Treasury's investment will be worthless....
Meanwhile, Keefe, Bruyette & Woods issued a new report discussing the liquidity situation, saying it too believes the Fed needs to step forward and clarify what type of funding facility it can supply to MBS servicers but adds "this is unlikely to happen until the GSEs start seeing a meaningful increase in forbearance activity."
9.4.2020 : www.forbes.com/sites/alyyale/2020/04/08/...d-19/#21287b9d5ecb Applications for assistance/rate suspension are already greater now than in 2008 : "Each of the top five servicers has already received more forbearance requests in the last month than in the entire financial crisis of 2008," says Taylor, managing partner at Digital Risk..."
Powell suggested that "the Fed may be considering some kind of support for companies that play an important role in the mortgage servicing industry. "We're watching the situation closely with mortgage servicers," he said. "We are certainly looking at this as a key market that supports households and consumer spending."
10.04.20 amid crisis : Mr. Cooper is currently looking to fill 193 positions. Mainly in originations, servicing, Xome, information technology.....and bankruptcy specialists....u.a. nationstar.wd5.myworkdayjobs.com/MrCooper
Bloomberg article 4/10/2020 : Now many of these companies say they desperately need a bailout to avert bankruptcy and a possible collapse of the U.S. housing market. Any bailout might not come quickly, as regulators are hesitant to provide additional help to see if the measures already in place will alleviate the industry's expected liquidity crunch.... That could lead to worrisome moments for Quicken Loans, Freedom Mortgage, Mr. Cooper Group Inc. and other nonbank mortgage companies"
4/11/2020 themreport.com/daily-dose/04-10-2020/...ity-facility-expanded Servicer Liquidity Facility Expanded...Ginnie Mae announced Friday an All Participants Memorandum (APM) that expands the SERVICER assistance program in response to the spread of COVID-19. The APM implements a new version of the existing Pass-Through Assistance Program (PTAP) FOR SERVICERS WHO ARE FACEING A PROVIDING cash shortage related to coronavirus. Ginnie Mae states that application of PTAP to the COVID-19 national emergency will allow SERVICERS to apply for SUPPORT in meeting their contractual obligations to make "timely and full principal and interest payments" to mortgage-backed securities (MBS) holders WITHOUT going into default.
PRESSURE INCREASES "Mnuchin was responding to a question about the letter sent Friday by a group of House Republican lawmakers asking Mnuchin to establish a forbearance liquidity facility for mortgage servicers. The Republicans' letter was the latest push by the housing industry and beyond to establish a federally backed liquidity facility for mortgage servicers to address the increase in forbearance caused by the corona virus. A bipartisan group of senators also called on Mnuchin last week to establish a liquidity facility."
It remains exciting : Servicers will be affected by the $2 trillion stimulus package, as borrowers will be allowed to defer payments on government-backed mortgages for up to a year. An analysis from Black Knight's recent Mortgage Monitor report found that if 5% of homeowners filed a forbearance claim, servicers would have to advance more than $2.1 billion a month in principal and interest to security holders. If the number of homeowners seeking forbearance increases to 10%, the monthly cost could rise to $4.2 billion..."
Messages like this came to the competition : "Angel Oak Mortgage Solutions, which specializes in so-called non-qualified mortgages that can't be sold to Fannie Mae or Freddie Mac, has laid off nearly 200 of its 275 employees in the midst of the coronavirus pandemic...."
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