Morning Report: New guidance out of FHFA

Vital Statistics:

 

Last Change
S&P futures 2783 -23.1
Oil (WTI) 26.09 0.29
10 year government bond yield 0.63%
30 year fixed rate mortgage 3.36%

 

Stocks are lower this morning on no real news. Bonds and MBS are up.

 

Initial Jobless Claims came in at 3 million last week. This puts the number of jobs lost to COVID at 36.4 million, or about 430 jobs per death.

 

The FHFA made an announcement yesterday which permits servicers to allow borrowers who enter forbearance to wait to pay back the skipped payments until they either refinance the loan or at maturity.

“For homeowners in forbearance due to COVID-19, payment deferral allows them to make up missed forbearance payments when they sell their home or refinance,” said FHFA Director Mark Calabria. “This new forbearance repayment solution responsibly simplifies options for homeowners while providing an additional tool for mortgage servicers. Borrowers who can pay their mortgage should, because missed payments remain an obligation that will ultimately have to be repaid.”

Servicers are required to evaluate borrowers for one of several repayment options, generally referred to as a “hierarchy” of repayment and loan modification options. The big question is whether the borrower can demand the servicer provide the option they want. Who has the final say on the repayment plan? The borrower or the servicer?  Plus, since Fannie will reimburse the 4 months of advances immediately, does the servicer have any financial incentive to choose one plan or the other?

One of the biggest deterrents to taking forbearance was that you would be unable to refinance your mortgage until the missed payments are made up. But, since this contemplates paying it off on a refi, then I guess that isn’t the case? I am sure FHFA and the GSEs will provide more guidance.

Remember the huge Fannie and Freddie LLPAs for loans that go into forbearance before they are sold to Fannie Mae? Correspondent lenders are removing them. I haven’t seen anything official, but it looks like the government might have backtracked on that one.

 

While Jerome Powell was greasing the skids for a prolonged recession, that might not be what happens. Don’t forget, there was nothing wrong with the economy to begin with. No bubbles, no buildup of inventory and bad debt, no mal-investments to work off. The economy was put into a medically-induced coma. The real work of recessions – working off excess inventory, disposing of bad assets, trimming bloated payrolls, isn’t applicable here.

The stimulus dollars (along with people being free to not pay their mortgage for a year) will provide an immense jolt to the economy. Think of what you would do if you all of a sudden could just, stop, paying your mortgage for a year. And you didn’t have to pay it off until you refinance or move? That is a lot of additional disposable income.

 

Even with COVID-19, some of the hottest markets are still going strong. The Denver area is still going strong. FWIW, I was listening to the Equity Residential earnings call the other day, and the company noted that traffic and applications started off down 50% on a YOY basis in March when the government initiated the stay at home orders. Things have improved so much that traffic and applications are now flat YOY. Delinquencies? About 5%. While Equity Residential is mainly affluent renters, this is a pretty interesting data point. Note however that the Multifamily Housing Council reported that 20% of renters have failed to make their May payment as of May 6, so it isn’t all great. But so far so good.

24 Responses

    • So the Republicans are going to lose all the Inside-the-Beltway neocons. That’s a tragedy.

      All you need is for a Sanders or a Tulsi Gabbard-type to be the Democratic nominee and they will have nowhere to go. They will pine for the days of Obama and his drones.

      Like

    • And while I don’t necessarily advocate Trumpism as the permanent orientation of the Republican party myself, I think it can only benefit the GOP generally to root out as many of the modern neocons as possible. They only infiltrate the Republicans and Democrats because the branding of having a separate “Endless War Party” has such bad optics.

      Like

      • In hindsight, yes. I was wrong myself on a lot of things.

        Like

        • I was conflicted during the Iraq war era. I felt that we had an obligation to spread democracy–if it was possible. I didn’t think progressives in America or the world would ever let us do what was necessary, so I thought: not actually possible. But perhaps a worthy thing to try. Jury is out.

          No longer conflicted. Projecting American power without a clear national interest–that is, the foreign power has basically declared war on us or our allies–is not a good idea. So I’d still support the initial war in Afghanistan after 9/11 and they were protecting Bin Ladin. But now? We should be out of there. Should have just left.

          Maybe we occasionally do stuff like napalm the poppy fields. Maybe. But ultimately we should be about protection and preparedness, not fixing the world. Because it’s not possible. If it was, I might be for it. But I don’t believe it is.

          Like

        • If we’re going to do stuff militarily we need to do it. Re Irag, kill Saddam, replace him with a US friendly thug who will keep the lid on things and let the Kurds be autonomous. Ditto Afghanistan. The nation building stuff is something we cannot do unless we essentially slaughter all the working age men a la Japan and Germany.

          Like

        • I don’t think we should do it unless we’re willing to fucking annex the country like Hong Kong–next 50 years you belong to America!

          In that time, bulldoze the culture and replace it with American culture. If you’re not going to do that, don’t bother.

          Like

    • who was more conservative? jen rubin or dave weigel?

      and i think the neocon interest in conservatism begins and ends with Israel. Other than that, they are garden-variety liberals.

      Like

      • I’d actually say Weigel is at least more honest.

        Like

        • I don’t pay attention to either of them. They aren’t “from the right”–any more than David Brooks–which is fine. They are from the left-to-center on most things–perhaps in some new direction entirely if the mood strikes them. But suggesting the represent conservatism the way other NeverTrumpers might is just silly. There are plenty of actually conservative NeverTrumpers out there who just don’t like Trump and see him as a poor standard-bearer. Get Jonah Goldberg or someone to take your “from the right but hates Trump” position.

          Like

        • The problem w/Jonah is he has to insert a Trump insult every other sentence. It’s reflexive, like if he doesn’t do that people will think he’s pro Trump. I don’t care that he doesn’t like Trump it just makes his writing tedious and essentially Trump focused all the time.

          Like

        • Agreed. And it’s really weird. He’s like “deep dive” into the historical and philosophical roots of political ideologies and political parties and debates the underpinnings of policies and then it comes to Trump it’s like “and Trump thinks we should drink bleach!”

          It’s like something about Trump turns him into a WaPo reporter or something.

          Like

        • Agreed. And it’s really weird. He’s like “deep dive” into the historical and philosophical roots of political ideologies and political parties and debates the underpinnings of policies and then it comes to Trump it’s like “and Trump thinks we should drink bleach!”

          and then the dog had a cough, so i took her to the vet and then we went to the park and played catch and she thought she saw a squirrell….

          Like

        • Not the dog again – (The Couch)

          Like

        • I love the dog stuff! That’s one of the reasons i suffer through the Orange Man Bad every other sentence stuff.

          Like

        • I love his actual punditry that is actual punditry. He spends too much time on Twitter, though–listening to his podcast (the Remnant, which when he’s off Trump is generally excellent) I think a lot of the Trump stuff is whining because a lot of former colleagues and friends have gone full God Emperor Trump (and for good reason, as a lot of them have political careers in which you proceed confidently in the direction the wind is blowing if you like money). And it annoys him that they get pissed any time he has a legitimate criticism of Trump.

          He’s clearly a little more to the left than he was (social pressures) and like I say, I really like him, and I’ve given the Dispatch a try but it’s trying to be centrist and “an eclectic mix”, it’s kind of left-of-center, pining for the good old days of the permanent Republican minority when everybody got along, and David French is very much a closet (or, I guess, Christian) progressive. And they are all kind of globalist . . .

          But when it gets to political and ideological history I still like Jonah a lot. And Liberal Fascism, the Tyranny of Cliches, and Suicide of the West are all great books (although Liberal Fascism would be better titled A History of Progressivism). And I like the personal stories. And he knows a lot of people who are more libertarian (which, at least in the podcast world, seems to be a catch-all for everybody who doesn’t fit neatly into conservative/progressive/liberal molds) and the interviews are about ideas. Which I enjoy.

          So, unlike Ace, I have no desire to throw the baby out with the bathwater. At least right now–very concerned about David French’s involvement with The Dispatch. Most of the time I find him pretty insufferable. Closet progressivism wrapped in Catholic piety doesn’t do it for me.

          Like

        • I feel like David French is a progressive who rejects the left’s rejection of Christianity. And the logical contortions that he takes in literally every argument I’ve ever heard or read him making make my brain hurt. Why they courted him for the dispatch I just don’t know.

          Clearly as a pioneer of the noble yet inevitably doomed idea of All Things in Moderation, I actively like the idea of thoughtful people at different points on the ideological spectrum debating ideas and tackling topics from different viewpoints. And there are often good arguments on both sides of an issue and are worth discussing. But having any opinion (even one I agree with) and then defending it with tortured logic loaded with what feel like false assumptions and premises (that are just presented, not proved) . . . ugh!

          I’m guessing French has social and business connections that they knew could bring a lot of money over to The Dispatch, especially if he was given a prominent role–and everybody needs money. That’s the only justification I can see.

          Like

        • KW:

          Most of the time I find him pretty insufferable.

          I think that is the perfect word for French.

          Like

      • Bill Kristol is very much a New American Century guy–if we aren’t projecting power early and often all across the 3rd world, he has no interest. I think a lot of them are very into the idea of a globalist world with America as the military muscle. If it was all about Israel I’d think Kristol would be more forgiving of Trump.

        Like

    • Glenn Greenwald snarked on this:

      Like

      • I feel like her third reason is really her first, second, and every reason at the end of the day:

        Third, Biden is fortunately an internationalist at heart who supports an active U.S. presence in the world and still believes U.S. leadership is essential. Most NeverTrumpers have enthusiastically embraced that mind-set for decades, but we must now do some serious thinking about how the United States leads, which international institutions need to be reformed and how we meet the challenge of autocratic states and their undermining of democracy. The isolationist temptation is never fully suppressed, but we must do our best to bolster those who share our worldview.

        Most of the rest was Democratic/progressive talking points about how Biden is Awesome and Orange Man Bad is Hitler.

        Depth.

        Like

  1. I’ve been thinking about the Flynn judge and a couple of things occurred to me. The first thing is that he believes what he reads in the media. I’m assuming he’s a consumer of WaPo and the NYT along with CNN.

    The second thing is I bet his ego is so big that he thinks his condemnation over the governments corruption during the Stevens case was so thorough and so institution-changing that he thinks they couldn’t be capable of doing it again.

    Finally, for a Federal judge to openly acknowledge that coercion is a regular and integral part of the Federal criminal judicial process could open it up to a lot problems.

    Like

    • for a Federal judge to openly acknowledge that coercion is a regular and integral part of the Federal criminal judicial process

      Is there anyone who truly doesn’t know this? It gets reported on. It’s part of the story of lots of folks who get their convictions overturned. It’s shown in pretty much every police procedural on TV. Suddenly pretending it’s not a thing because don’t OFFICIALLY say it’s a thing seems really weird.

      Like

      • It’s tough on the media narrative, number one. Number two is that I think your average American thinks of the Federal Judiciary, if they think about it all, as a step-above the state judiciary. So it’s also about protecting the myth, which is VERY normal federal behavior.

        Like

Be kind, show respect, and all will be right with the world.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: