The National Association of REALTORS® is asking the Federal Housing Finance Agency to extend its program that allows Fannie Mae and Freddie Mac to purchase eligible loans that enter forbearance after closing. The program is set to expire Aug. 31.
During the week ending Aug. 9, lenders received nearly 55,000 forbearance requests, which marks a modest decline from a week earlier. However, while the volume of loans within this group is relatively low, NAR notes that the threat of locking up lenders’ credit lines without this program could rise.
“The option provides important liquidity to the market and reassurance to lenders,” NAR writes in a letter this week to FHFA Director Mark Calabria.
Credit standards tightened sharply this spring, and some housing analysts believe that the tightening of credit was due more to a reflection of liquidity than credit default concerns. “It is important to note that tightening is taking place disproportionately on entry-level, middle income, and low and moderate income buyers and persons of color, undercutting the housing trade-up process,” NAR writes in the letter to the FHFA. “The GSE’s forbearance purchase program provides a reliable source of liquidity for lenders, moderating originators’ concerns, and support access for home buyers.”
NAR urged the FHFA to extend the program through the fall and reduce or eliminate its fees to purchase these mortgages by tapping the GSEs’ $27.8 billion capital. NAR also reminded the FHFA that the GSEs are charged with supporting liquidity in adverse market conditions and that eliminating the fee could improve access.