Lenders coalition calls for federal support for $3TN in mortgages
A coalition of mortgage industry groups representing lenders, finance companies and others have come up with a plan to help “all borrowers, including almost $3 trillion in home loans over which the government has less control,” according to a letter to Treasury Secretary Steven T. Mnuchin and other federal officials.
They are calling for a collaborative effort to support millions of borrowers whose mortgages are not owned by the government-sponsored enterprises, according to The New York Times. “And they want the federal government to backstop it.”
“The more consumers we help through forbearance and the longer this goes on, the greater the strain on the servicers needed to foot the bill,” the groups, including the Housing Policy Council, the American Bankers Association and the Mortgage Bankers Association said.
The finance industry groups, “which together represent the banks, finance companies, servicers and mortgage investors that make up the totality of the United States mortgage industry, want to give borrowers a three-month break from making mortgage payments – and possibly extend the break to 12 months, – if the coronavirus crisis has reduced their income, sickened them or kept them from working.”
Such help would cost tens of billions of dollars. The groups estimate $36 billion would provide three months’ worth of temporary payment relief only to 25% of all mortgage borrowers. These costs would soar to $100 billion if payments had to be frozen for nine months.
Last week, Federal Housing Finance Agency ordered relief that covers about 29 million homeowners. FHFA has instructed mortgage servicers to allow borrowers whose mortgages are owned by Fannie Mae or Freddie Mac to delay payments approving a forbearance program that allows for an up to 12 months suspension due to COVID-19 hardship. Federal housing officials have announced a nationwide eviction and foreclosure moratorium for borrowers with mortgages backed by Fannie and Freddie,or insured bythe Federal Housing Administration.
“There is broad, sweeping agreement this [expanded relief] is urgent and it needs to happen now, not a week from now,” David H. Stevens, a housing official under President Barack Obama and a former chief executive of the Mortgage Bankers Association told the Times. “The industry needs the federal government to immediately mobilize a response” bigger than the Federal Reserve engagement in quantitative easing by buying private-issuer mortgage securities in great quantities to revive the mortgage market during the 2008 crisis.
KeyBank pledges $1MM offers 90-day deferrals
Cleveland’s KeyBank is assisting clients in hardship due to the COVID-19 outbreak by further expanding existing programs adding loan payment deferrals for at least 90 days, waiving late or overdraft fees, and halting new residential property foreclosures and vehicle repossessions.
Borrower payment deferrals apply to all consumer credit products, such as mortgage, home equity, student, auto, lines of credit and credit card for both principal and interest – and no negative reporting to credit bureaus. Interest will continue to accrue during deferral.
In addition, The KeyBank Foundation has committed $1 million to support communities across the bank’s footprint. The bank will match 2:1 all employee gifts up to $2000 made between March 1, 2020 and April 30, 2020. “Philanthropy will play a critical part in our response to spread of the COVID-19,” said Elizabeth Gurney, Director of Philanthropy. “This initial commitment is just the start.”
Small businesses will benefit from lower borrowing costs, the option to defer payments for 90 days, and the launch of Temporary Assistance Loan a shorter-term unsecured personal loan up to $5,000 with same day approval and next day funding.
Employee support measuresinclude flexible work arrangements, additional paid leave, premium pay opportunities and childcare reimbursement for those who must report to their worksite. The bank is also covering the cost of COVID-19 testing, waiving all co-pays and deductibles related to medical visits or consultations.
Established 190 years ago, the $145 billion-asset bank conducts business in 15 states. Effective Monday, March 30 the bank will temporarily close certain locations of its branch network continue to operate as drive-thru and appointment only along with online and mobile services.
Chris Gorman, the bank’s President and Chief Operating Officer urged clients who are facing financial difficulty to contact the bank so it “can find the best solution.”We are already seeing the economic impact of COVID-19,” he said. “KeyBank is well positioned to be part of the solution” in good times and in challenging times.
Paid leave law: Who and what does it cover?
The COVID-19 emergency relief package promises aid to some, but not all. It does include paid leave options for mothers, and even part-time and self-employed workers. But before planning a leave, whether for family reasons or because you are personally affected by the outbreak, it is important to know there are lots of exceptions.
For example, the rules allow businesses with fewer than 50 workers to apply for an exemption, while they completely exclude companies with more than 500 employees. Many workers at big businesses already have paid sick leave, but businesses may have to review benefits to low-wage workers who are the least likely to be covered.
Parents can get 12 weeks of paid leave to care for children if the schools are closed, or in case a child’s care provider “is unavailable because of outbreak.”
Government employees and most workers can get paid leave if they work at small and midsize companies, granted they have been employed for at least 30 days.
Employees can qualify for up to two weeks of paid sick leave, “if they are ill, quarantined or seeking diagnosis or preventive care” for COVID-19, or if they are caring for sick family members, according to The New York Times.
Part-time workers would get paid the amount they typically earn in a two-week period. Self-employed workers, including gig workers such as Uber drivers, also can receive paid leave, but they must do the math first. They must calculate their average daily income and claim it as a tax credit.
Business owners and employees can find more information published by The New America Foundation, which includes a detailed list of what large employers offer and their policies.
It is important to remember that the leave law expires Dec. 31
Amilda is an experienced financial journalist and branding content strategist with a keen interest in how entrepreneurs turn brilliant ideas into products and services that help advance business acumen and improve people’s lives in unprecedented ways. She has covered the mortgage market for over 15 years.