Liquidity, guidance, relief from FHFA would help CUs serve more

April 14, 2020

The Federal Housing Finance Administration could make several policy changes to help credit unions assist members better during the coronavirus disease (COVID-19) pandemic, CUNA wrote to FHFA Director Mark Calabria Tuesday. CUNA thanked the agency for its work in the past month to provide flexibility for lenders to work with borrowers, and noted that its own engagement has helped CUNA identify other helpful policy recommendations.

“While the COVID-19 pandemic has dramatically changed almost every aspect of everyday life, credit unions are standing true to their mission and continuing to assist their members and communities,” the letter reads. “Any liquidity assistance, clear guidance, and regulatory relief the FHFA can provide will greatly help credit unions in their efforts to assist mortgage borrowers in need.”

Recommendations include:

  • Calling on FHFA to support and work with Congress to create a financing program, or liquidity facility, for mortgage servicers in need of assistance in order to preserve servicers’ ability to respond to the unprecedented levels of payment forbearance required to help families affected by COVID-19;
  • Quickly providing additional clarity on how Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac will address temporary income disruptions if a borrower requests forbearance shortly after closing their loan, and the loan is then not saleable to the GSEs;
  • That FHFA allow for trial modifications for borrowers who have lost their jobs and do not expect to get them back;
  • FHFA and the GSEs should release guidance on:
    • The treatment of escrow, private mortgage insurance (PMI), credit life, credit disability, and interest during the period of loan deferment and after the deferment concludes.
    • Providing periodic statements to borrowers who are deferring loan payments in a manner that avoids borrower confusion.
    • The challenges in obtaining income and/or employment documentation for borrowers during the pandemic.
  • Urging FHFA to delay implementation of the new Uniform Residential Loan Application, which is currently required for use by Nov. 1.