Morning Report: Almost 3 million people request forbearance

Vital Statistics:


Last Change
S&P futures 2815 -50.1
Oil (WTI) 11.23 -7.29
10 year government bond yield 0.63%
30 year fixed rate mortgage 3.38%


Stocks are lower this morning as people watch the price of oil collapse. Bonds and MBS are up small.


Oil is down huge this morning. Why? Nowhere to put it. We are getting back towards the late 90s, when the Economist put out its famous “drowning in oil” cover, which marked the bottom of the oil market. Note that it is the May contract, which expires this week that is down so much. Since it is no longer front month, it isn’t really actively traded and therefore not representative of the true price of oil in the markets. The June contract is trading around 22 bucks. Ironic that we are headed into the summer driving season with oil at the lowest in a generation, but there is nowhere to go.



No major economic data this week, aside from initial jobless claims. We do get some real estate data with existing home sales, new home sales, and the FHFA House Price Index. The NY Fed is decreasing its TBA purchases to $10 billion per day.


The Chicago Fed National Activity Index was flashing “recession” in March, falling to -4.17. (Anything under -0.7 is considered recessionary). Mohammed El-Arian says the economy could contract 14% in 2020. Citi also warns that the markets aren’t pricing in a second wave of infections.


Almost 3 million people have asked for mortgage forbearance under the CARES Act. This represents 5.5% of all active mortgages. This is 4.9% of all Fannie / Freddie loans and 7.6% of FHA / VA loans. So far servicers are getting crushed by this. “It’s frankly frustrating and ridiculous that we do not have a solution in place,” said Jay Bray, CEO of Mr. Cooper, one of the nation’s larger mortgage servicers, who consulted with the Trump administration to set up the bailout. “When we were working on the Act, we had liquidity in it, and it did not make it into the Act. We were told it would be handled through the administration, and it’s a real problem.”

Last week Senators Sherrod Brown and Maxine Waters sent a letter to the Administration:  “The government must be prepared to respond quickly to prevent a liquidity shortfall in the single-family and multifamily mortgage markets, and to ensure that consumers are equitably served by that response. Any liquidity provided must be used to stabilize the market at a time when many families may fall behind on payments and facilitate relief to individual homeowners and renters throughout the market through forbearance, loss mitigation, and protection from displacement, rather than immediate defaults and evictions.”

Civil Rights and fair housing groups are also requesting a facility for servicers. While it seem unusual for the Professional Left to go to bat for servicers, they sense that if no facility is set up, no one will want to do FHA loans in the future. FHA business is severely restricted at the moment.



12 Responses

  1. The most NYT editorial ever

    Liked by 1 person

    • The guy writing this doesn’t know the swastikas at these things were a hoax. And apparently didn’t have the brainpower to consider that a Trump/Pence sign with a giant swastika on it probably wasn’t from a Trump supporter.

      The paper of record.

      “Twisted liberty”. Crazy for people to want to, you know, get out of their house and perhaps work for a living to pay some bills. Just what you’d expect from crazy libertarian Nazis.

      Because we know there’s only one possible way to respond to a potential pandemic: however the government, many of them who have never lived a moment of their life in the private sector, tells you that you have to!

      Because there can’t possibly be a middle ground between rubbing your face against every sick person you encounter and shutting down the economy and locking everybody in their house.


    • I thought it was a good editorial as far as it went. What it misses for me is the actual desperation of families running out of food and the wherewithal to get it. The Austin American-Statesman conducted extensive interviews with the protestors. Most had driven hundreds of miles and were disappointed in the small turnout. But their stories were so sad. No work, no money, no food…and hardly anyone talking about their civil liberty, just their need to go back to work.

      I think there is a real disconnect from the media masters who organized this as well as those who concentrated on reporting on the organizers. The poor families who actually showed up need help. That is a more urgent story, I think.

      Liked by 1 person

      • I think it is the solipsism of the NY-based media. Ground Zero for COVID is Brooklyn. Since they can all work from home and the bodegas are stocked, everyone can do this…

        And anyone who won’t is just a selfish bastard

        Liked by 1 person

    • Brent:

      The most NYT editorial ever

      Indeed. It’s really little more than the typical attempt to discredit anything on the right by associating it with disreputable figures, in this case Alex Jones. Pure nonsense.

      What I find most irritating, though, probably because it is so common now among politicians ordering these lockdowns (it is rampant here in the UK), is the typical progressive pretense that all of this is simply the necessary result of SCIENCE.

      For those who’ve chosen to put their trust in science during the pandemic…

      First of all, there is a big difference between trusting “science” and trusting scientists. People like the author are doing the latter. And given the constantly changing models, forecasts, and “guidance” it isn’t exactly crazy to wonder why anyone would just blindly trust scientists. But more importantly, the decision of how to behave in the face of an outbreak of disease, whether personally or as a matter of political policy, is about making value judgments, not implementing “science”. A decision to sacrifice economic well-being as protection for one’s physical well-being, along with the degree of that sacrifice, whether on a personal or a societal level, is a value judgment. It is not a “scientific” determination. Science might help inform the risks involved in that value judgment, but it can’t be defended as nothing but the result of science, which is a deceit that progressives routinely engage in with regard to their policy desires.


      • in this case Alex Jones

        Was wondering who are the disreputable figures on the left, really? Who do folks on the right pull out to discredit liberalism or left-wingers generally?

        It occurs to me that it’s either Hillary Clinton or the folks on the squad, or Adam Schiff, or other elected Democrats. It’s interesting how much of the discrediting-by-association on the left tends to be about Alex Jones, Rush Limbaugh, or even further out with Richard Spencer. Although Dick Cheney and Steve Bannon have also served those roles.

        typical progressive pretense that all of this is simply the necessary result of SCIENCE

        Whatever I want is science. If you don’t like what I want, then you are anti-science and deny THE FACTS.

        But yes. Lockdowns aren’t science–and some of the actual science indicates that, say, being outdoors is the safest strategy, and potentially safer than being at home. But that’s not conclusive or complete, as is NONE of the actual science around the present pandemic. Without solid data, “science” its just another work for “utter speculation” and sometimes “just making shit up”.

        It’s a bit of trying to turn science into a modern priesthood, where to question the pronouncements of the church is to deny God. It is, to some extent, superstition being dressed up in the clothes of science. But there isn’t solid data, the actual data is constantly changing, and there are no double-blind studies. These folks are trying things–not implementing engineering based on established science. Trying to imply they are is just manipulation.


  2. This is really an interesting thread regarding Obama’s Russia hoax against Trump.

    Liked by 1 person

  3. I knew of massive Chinese lending but did not know the mechanics of the loans. An eye opener, at least for me:

    Liked by 1 person

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