MReport August 2020

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M R EP O RT | 47 SERVICING THE LATEST 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 Mortgage Servicers' Implementation of the CARES Act The House Committee on Financial Services discussed the length of forbearance for homeowners and what they are receiving. D emocratic Congressman Al Green of Texas be- lieves something's amiss when it comes to home foreclosures among those of color. In a virtual webcast hear- ing, Green, Chairman of the Subcommittee on Oversight and Investigation—Protecting Homeowners During the Pandemic: Oversight of Mortgage Servicers' Implementation of the CARES Act, expressed "conster- nation" over the fact that, too often, borrowers with the 180-day forbearance set in the CARES Act instead received only 90 days. Many borrowers are unaware of this discrepancy and many are "those of color. It seems like this, like many other things, is having a disproportionate impact on persons of color, which causes me a good deal of consternation," Green said. The Congressman indicated he had evidence of this failure to comply stemming from a request by one of his constituents who brought it to the attention of his office. Another stickler: the forbear- ance agreement has been per- ceived by some to be an honors system; that is, it could be de- termined whether borrowers are afforded the full 180 days, initially with the opportunity to exempt another 180 days, said Green, who noted this was never intended. Instead, he explained, "it was my intent that the borrowers would acquire the 180 days and then could opt to have another 180 days," otherwise compelling bor- rowers to consider filing a lawsuit, hiring a lawyer, and taking the matter to court. "I'm very con- cerned about this," Green said. Meantime, ranking mem- ber Andy Barr, a Democratic Congressman from Kentucky, said COVID-19's sparked, among other things, a government-imposed shutdown of the economy; dis- rupted the lives and livelihoods of citizens across the country; compelled businesses to shutter; and precipitated skyrocketing unemployment. Furthermore, workers who remained employed face uncertain prospects for their long-term stability, putting families at risk of losing their homes. Barr said the CARES Act created forbearance options for struggling homeowners. "At the peak, approximately 4.7 million families were in forbearance and many more would have undoubt- edly lost their homes or struggled to make payments." The CARES Act made it easier for homeown- ers to pay their mortgages, for families to stay in their homes and for small businesses "to build a bridge to the other side of the crisis," Barr continued. "We've seen the number of mortgages in forbearance decrease since the peak, declining a full 13% since May," he added. "However, we're not yet out of the woods; there still are millions of home- owners facing hardship and requiring additional assistance." The CARES Act (Pub. L. No. 116-136; the "Act") was enacted on March 27, 2020, to provide finan- cial assistance and other types of relief as the negative economic im- pact of the COVID-19 pandemic set in across the country. Abetting the efforts of Americans struggling to make mortgage payments due to the economic slowdown caused by the pandemic are addressed in the consumer finance provisions under TITLE IV of the Act. Covered by these provisions are "Federally backed mortgage loans," defined under the Act as any loan which is secured by a first or subordinate lien on residential real property designed principally for the occupancy of from one-to-four families that is: Insured by the Federal Housing Administration or under the National Housing Act; Guaranteed or insured by the Department of Veterans Affairs or the Department of Agriculture; or Purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association. Under Title IV of the Act, the consumer finance provisions di- rectly address helping Americans struggling to make mortgage pay- ments due to the economic slow- down caused by the pandemic. "We've seen the number of mortgages in forbearance decrease since the peak, declining a full 13% since May. However, we're not yet out of the woods; there still are millions of homeowners facing hardship and requiring additional assistance." —Andy Barr (D-Kentucky)

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