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1 1 (May 13, 2020)

handle is hein.crs/govdamx0001 and id is 1 raw text is: Researh Sevice The Impact of COVID-19-Related Forbearances on the Federal Mortgage Finance System May 13, 2020 One of the major economic impacts of the Coronavirus Disease 2019 (COVID-19) pandemic has been loss of income, which has left many Americans unable to repay their financial obligations-including their mortgage payments. In response, regulators have encouraged financial institutions to work with customers to allow them to defer payments on mortgages through a process known as forbearance. Provisions in the CAR.S Act (P.L. 116-136) require mortgage servicers to provide several months of forbearance to borrowers (at the borrowers' requests, after they demonstrate a COVID-19-related financial hardship) with a federally backed mortgage. This Insight explains the term federally backed mortgage and examines some of the potential impacts that forbearance on these mortgages may have on the mortgage finance system. What Is a Federally Backed Mortgage? With respect to the CARES Act, a federally backed mortgage generally includes mortgages that are either insured, guaranteed, or made directly by the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Department of Agriculture (USDA), and the Department of Veterans Affairs (VA), or has been securitized by Fannie Mae or Freddie Mac (collectively referred to as the government-sponsored enterprises, or GSEs) in the form of mortgage-backed securities (MBS). Additionally, Ginnie Mae-a federal agency within HUD-guarantees MBS that are composed entirely of mortgages that are guaranteed by federal agencies (such as FHA). GSE and Ginmic Mae securitization comprises over 60% of the $11 trillion in outstanding mortgage debt and over 95% of residential MBS. COVID-19 Forbearances and the Mortgage Finance System Forbearance allows borrowers to temporarily defer payments until they may be better able to meet their financial obligations. It is not loan forgiveness-the consumer ultimately needs to make payments that are deferred-but deferred payments can be made up in a number of ways, including making a lump sum repayment at the end of the forbearance period, Congressional Research Service https://crsreports.congress.gov IN11385 CRS NStGHT Prepaimed for Mernbei-s and Committees 4 o. C- --q .. . . . . . . . ...-----------------------------------------------------------------------------------------------------------------------------------------------------------------------