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30 | M R EP O RT EXPERT INSIGHTS COVID-19's Impact on Mortgage Credit Eric Kaplan, Director, Milken Institute of Financial Research, Vice-Chair of the Consumer Advisory Board of the Consumer Financial Protection Bureau, spoke on how the pandemic will cause credit limits to rise. M // How have recent events impacted the access to credit and mortgage eligibility for potential homeowners? KAPLAN // We've seen a sig- nificant restriction in the access to credit. Keep in mind that the COVID-19 crisis looks a lot different than the financial crisis back in 2008. There, we saw a slow roll over the course of several years in the years that fol- lowed, and now, we're seeing an unprecedented wave at breakneck speeds. So, first and foremost, we're seeing that just by virtue of job loss and income curtailment or income loss, people just aren't able to qualify just by virtue of that alone. And we see what the unemployment numbers are, the underemployment numbers, whether actual or projected, it's devastating to wide swaths of the community, and only looks to increase as the COVID-19 crisis continues. We're certainly all hoping for a speedy resolution just by that fact alone. There are market factors at play that are operating to restrict access to credit. A lot of this comes from delivering forbear- ance, which certainly, it's a necessary relief being delivered to consumers, but there are impacts from that relief, and as it plays out across the different channels, agency, government, non-agency. We're seeing things in terms of or impacts from service or liquid- ity needs to meet the provision of forbearance relief, repurchase requests, future loss exposure, secondary market impacts. Warehouse providers are pull- ing their repricing lines, which is certainly restricting credit. We've seen the Federal Housing Finance Agency impose a loan level pricing adjustment, LLPA, on loans that go into forbearance shortly after origination, but prior to delivery to the agencies. All of that and other factors are causing a cascade of market impacts that are leading to this restriction of credit.