Treasury Secretary Steven Mnuchin said he has formed a task force of U.S. financial regulators to deal with the liquidity shortfall that mortgage service firms may face as swaths of homeowners stop making their monthly payments.
Mnuchin said he’s asked the task force members to give him recommendations by March 30 on how the U.S. can address a potential cash crunch for servicers, who collect money from borrowers monthly and facilitate payments to investors in mortgage bonds.
He made the remarks during a Thursday call with members of the Financial Stability Oversight Council, a panel set up after the 2008 financial crisis that monitors threats to the U.S. economy. Those on the call included Federal Reserve Chairman Jerome Powell, Securities and Exchange Commission Chairman Jay Clayton and Federal Housing Finance Agency Director Mark Calabria, whose agency regulates mortgage giants Fannie Mae and Freddie Mac.
Mortgage servicers face potential stress because the FHFA and lawmakers are granting forbearance — a widespread payment holiday — for property owners who can demonstrate financial hardship due to the virus.
Calabria said Wednesday that a lot of mortgage servicers could find themselves at risk of collapse if the coronavirus pandemic lasts for more than two months.
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