Prioritizing Fannie’s and Freddie’s Capital over America’s Homeowners and Renter... (EventID=111005)

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On Wednesday, September 16, 2020, from 12:00 p.m. (ET) Full Committee Chairwoman Waters and Ranking Member McHenry will host a virtual hearing entitled, “Prioritizing Fannie’s and Freddie’s Capital over America’s Homeowners and Renters? A Review of the Federal Housing Finance Agency’s Response to the COVID-19 Pandemic."

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Witnesses for this one-panel hearing will be:

• The Honorable Dr. Mark A. Calabria, Director, Federal Housing Finance Agency
Background
The COVID-19 pandemic has harmed many homeowners and renters, and pushed the United States economy into a recession. Over 8.4 million homeowners are behind on their mortgage payments, another 3.6 million homeowners have entered into forbearance, and nearly 8.2 million renters are behind on rent with at least 46,758 evictions having been filed since the outset of the pandemic in just 17 U.S. cities. Mortgage rates have reached an all-time low following a series of cuts to federal interest rates by the Federal Reserve Bank that were intended to offset unstable market conditions created by the global spread of COVID-19. Yet, many consumers have been unable to access these rates because of high demand and low capacity among lenders when rates first began to decline in March and April,8 and because of regulatory decisions.

FHFA has regulatory oversight over Fannie Mae and Freddie Mac (collectively, “the Enterprises”). The Enterprises are charged with providing stability to the secondary mortgage market, responding appropriately to the private capital market, providing ongoing assistance to the secondary market and increasing access to credit, including for low- and moderate-income families, central cities, rural areas, and underserved areas, by increasing liquidity and improving the distribution of investment capital. In times of economic crisis, the Enterprises function in a countercyclical manner by ensuring access to mortgage credit when the private sector pulls back from the market. FHFA also regulates the 11 Federal Home Loan Banks (FHLBanks), which provide liquidity to FHLBank members in the form of low-cost loans collateralized by mortgages held in portfolio or other eligible sources of collateral, known as “advances.”

The Federal Housing Finance Agency’s Response to the COVID-19 Pandemic
Foreclosure and Eviction Moratoria
In response to the pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. The foreclosure moratorium under the CARES Act, which expired on May 17, 2020, included single-family properties with Enterprise-backed mortgages. FHFA has extended the equivalent of this foreclosure moratorium for Enterprise-backed single-family homes until the end of the year. The eviction moratorium under the CARES Act, which expired on July 25, 2020, included renters and homeowners in single-family, multifamily, and real estate owned properties with Enterprisebacked mortgages. FHFA has administratively extended an eviction moratorium for Enterprise-backed single-family homes until the end of the year,12 but despite language in FHFA’s initial press releases that implied renters in such properties would be protected from eviction,13 FHFA has since clarified that the only renters covered by this moratorium are those in Enterprise-owned properties, which includes less than 500 renters.

Later, in June, FHFA approved forbearance period extensions for multifamily property owners
with Enterprise-backed mortgages. However, multifamily owners who receive forbearance extensions must continue to provide CARES Act tenant protections to renters living in such properties. While FHFA has created a new database to help renters find out whether they are living in Enterprise-backed properties, there is no way for renters to verify whether or not the mortgage on their property is in forbearance. Under FHFA’s policy, multifamily property owners receiving new or modified forbearance would be required to notify their tenants that the mortgage is in forbearance and about the tenant protections associated with that status, but FHFA relies on the self-certification of owners that they have provided such notice.

Forbearance and Servicer Responsibilities
The CARES Act includes relief measures for borrowers who are unable to make their mortgage
payments due to a COVID-19 related hardship through forbearance and foreclosure protections. However, according to a survey by the FHFA Inspector General (IG), there was “incomplete and/or unclear information about forbearance and repayment on 14 of the 20 websites of the large servicers and generally limited to...

Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=406867

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