TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/211920
the latest Or ig i nat ion SECONDARY MARKET Zillow, Bipartisan Policy Center Discuss Secondary Market Reform se r v ic i ng Both groups examined the current legislative efforts to reform the secondary market and find a suitable solution for the GSEs. a na ly t ic s I s e c on da r y m a r k e t Freddie Mac announced it will "continue to monitor the situation and may provide additional guidance or requirements" should the shutdown go on for a prolonged period. Freddie Mac Issues Guidance on Borrowers Affected by Shutdown GSE reaches out to homeowners who are feeling the affects of the bipartisan blowout. I n an effort to keep the mortgage market running as smoothly as possible, Freddie Mac issued temporary guidance for lenders to continue approving loans for eligible borrowers during the federal shutdown. Dave Lowman, EVP of singlefamily business at the GSE, said the bulletin is "intended to give lenders the certainty to continue 56 | The M Report approving and delivering new mortgages that meet Freddie Mac guidelines to eligible borrowers, such as federal employees and contractors, during the temporary shutdown." The bulletin allows lenders to still deliver mortgages to the GSE if the borrower is not receiving a paycheck as a result of the shutdown, as in the case of currently furloughed workers. The loan must meet Freddie's other requirements, and there must be a reasonable expectation that the borrower will return to work when the government reopens. The company also reminded servicers that its mortgage relief policies are still available to public and private sector employees affected by the shutdown, meaning servicers can provide eligible borrowers forbearance (ranging from up to three to 12 months) that must not be reported to credit bureaus. In lieu of a tax transcript request, servicers can accept a borrower's most recent signed federal tax return for any information needed to evaluate eligibility for Freddie Mac's Home Affordable Modification Program, standard modifications, or other loan workout options. n the latest of its consumer education videos, Zillow recently sat down with the Bipartisan Policy Center's (BPC) Barry Zigas to discuss the center's ideas for GSE reform and how they compare to current legislative efforts. In an interview with Zillow chief economist Dr. Stan Humphries, Zigas—director of housing policy for the Consumer Federation of America and a commissioner on BPC's Housing Commission—described how the group's plan came together, a process that involved 16 months of research, hearings, and meetings with industry stakeholders. "What we emerged with was a plan that was very true to the principles that the commission agreed to use to guide its work," he said. BPC's plan shares similarities with those introduced by Sens. Bob Corker (R-Tennessee) and Mark Warner (D-Virginia) and by Rep. Jeb Hensarling (R-Texas) in that it calls for the unwinding of Fannie Mae and Freddie Mac over several years and the institution of a limited government guarantee on securities. Where it differs is in the details; for example, the Corker/ Warner bill puts a hard number on the amount of loss that must be absorbed before a federal backstop is trigged (10 percent), while the BPC plan allows for more wiggle room to adjust to market dynamics. "For instance, if the insurer saw a housing bubble beginning to inflate, like we saw recently, they could basically make what we call the capital call on the