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62 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT Implications of CARES Act on the Housing Market Community Development Funds given $5 billion in recent stimulus package. A report by Up For Growth looks at how the recently-signed $2.2 trillion CARES Act will impact the housing market. The report said the bill provides billions of dol- lars directed toward housing programs. Among the funds receiving money, the Community Development Fund was given $5 billion, rental-assistance programs were given $1 billion, $50 million was set aside for housing for the elderly, $15 million was set aside for housing for those with disabilities, and $2.5 million was appropriated for fair housing activities. However, the report says one of the most beneficial sections of the bill is the increase in unemployment insurance benefits. The bill includes an additional $600 per week for up to four months, which brings the monthly average to $3,769 from $1,369. Up For Growth says this money is essential to help people stay in their homes and provide financial stability. "Boosting and expanding eligibility for UI benefits ef- ficiently gets money into the hands of the people who need it most, whether for housing costs or other expenses. This money also helps stabilize the housing ecosystem as landlords, owners, and lenders depend on rental and mortgage income," the analysis said. The bill was approved by the Senate unanimously—96-0— and Senate Majority Leader Mitch McConnell (R-Kentucky) called the vote a "proud moment for the United States." One of the largest portions of the bill is that Americans who earn $75,000 in adjusted gross income would get direct payments of $1,200 each and married couples would get $2,400 each. Single Americans making more than $99,000 will be phased out of the payment plan and $198,000 for couples without children. Tendayi Kapfidze, Chief Economist, Lending Tree, said the payments to Americans will be kept to help people meeting financial obligations, especially the more than 3 million who filed for unemployment. "There is a big risk to our servicers from borrowers not sending in payments as they would still need to meet their obligations to investors," Kapfidze said. "This is especially acute for nonbank lenders who do not have sufficient reserves in place. It was disappointing that the bill did not directly address this risk. Loan Flexibility Approved for GSEs The authorized changes by the FHA are aimed to expedite loan closings. T he Federal Housing Finance Agency (FHFA) authorized several loan processing flexibilities from Fannie Mae and Freddie Mac. Flexibilities announced by the GSEs include: • Allowing desktop appraisals on new construction loans; • Allowing flexibility on demonstrating construction has been completed (alternative to the Completion Report); • Allowing flexibility for borrowers to provide documentation (rather than requiring an inspection) to allow renovation disbursements (draws); and • Expanding the use of the power of attorney and remote online notarizations. "These loan processing flexibilities will expedite loan closings and help keep homebuyers, sellers, and appraisers safe during this national emergency," FHFA Director Dr. Mark Calabria said. A statement from Fannie Mae said, "our ability to serve our customers is a top priority." Among the modifications announced by Fannie Mae modifying the age of document requirements from four months to two months for most income and asset documentation and expanded use of remote online notarization. Among the changes, Freddie Mac included modifications for its credit underwriting requirements. All changes are effective for mortgages with applications received dates on or after April 14, 20202, and will remain in place for mortgages with dates on or before May 17, 2020. Freddie Mac said sellers are encouraged to apply these updates to existing loans in process. Freddie Mac also announced flexibility for new construction properties for purchase transac- tions. The announcement added that these temporary provisions are effective immediately for all mortgages in-process and remain in place for mortgages with appli- cation received dates on or before May 17, 2020. The GSEs previously updated their Lender Letter to require that a borrower be evaluated for payment deferral prior to other mortgage loan modifications. Freddie Mac has announced similar changes, with the Freddie Mac Payment Deferral program. According to the GSE, effective January 1, 2021, Freddie Mac will launch a loss mitigation solution for borrowers who became delin- quent due to a short-term hard- ship that has since been resolved. "Customers want deferrals on the front end, as a 'right now' op- tion," said Courtney Thompson, SVP, Default Mortgage at Flagstar Bank. "I think consumers would be much happier with the relief we could offer them if that defer- ral was available now." According to Freddie Mac, the Payment Deferral is designed to provide relief to eligible Borrowers who have the financial capacity to resume making their monthly payments, but who are unable to afford the additional monthly contributions required by a repayment plan.