Fannie/Freddie Forbearance

Jmrunk's picture
Rank: Senior Monkey | 94

Earlier today, FHFA issued a press release outlining a forbearance program for both Fannie & Freddie. From what I've read, Freddie will extend a 3 month pause on all P&I + reserve which will be repaid over a 12 month installment period.

There are a couple of provisions, with the most glaring being that evictions are prohibited throughout the forbearance period.

Interested to hear what you folks think of this.

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHF...

Comments (7)

Mar 23, 2020

Pair this with the fact that the FOMC is about to purchase Agency CMBS for the first time, per this Commercial Observer article.

https://commercialobserver.com/2020/03/fed-promise...
https://www.newyorkfed.org/markets/opolicy/operati...

Mar 23, 2020

I saw that this morning. Fannie Mae MBS spreads blew out close to a 100% today as liquidity continues to dry up, and that's for government backed paper...

My gut instinct is that this will do little to restore short term confidence. Forbearance will only be a success if LL's are able to recoup 3x rental income as well. I just don't see this being the fix.

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Mar 24, 2020

So is this a complete forbearance/grace period that shifts the maturity date by 3 months?

Or is this more of a deferral where there is a payment "catch up" and the maturity date remains the same.

    • 1
Mar 24, 2020

Keeps the maturity date the same. The 3 months of P&I that they can defer will be paid back over 12 months, in equal installments.

Mar 24, 2020

Futher update to agency world.

Fannie is going to be instituing an interest reserve, up to 12 months of P&I payments for all loans >$6M. On the the top end, for tier 2 product, property will need to perform at a 1.25 DSCR for two quarters before the reserve is distributed.

Crazy times ahead.

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  • Analyst 1 in RE - Comm
Mar 24, 2020

So I work for an agency lender. Sounds like this could lead to layoffs? Pretty scared rn.

Mar 24, 2020
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