MBS: Government to mortgage servicers: good luck for now
admin | April 3, 2020
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Government regulators are resisting calls to assist mortgage servicers that may face a liquidity crunch due to the COVID-19 pandemic. The government is allowing most borrowers suffering hardship from COVID-19 to skip mortgage payments for up to 12 months without a hit to their credit scores. Many loans are packaged into securities that require the servicers to advance missing principal and interest on behalf of the borrower. Servicers may also need to pay hazard insurance premiums and property taxes on behalf of the borrower. Many servicers do not have enough capital to cover the anticipated advances and do not have the ability to raise those funds. Some government officials prefer to wait until it becomes clear how many borrowers stop paying their mortgages. The Bloomberg article is here. Source: Bloomberg, APS.
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