Long-term crisis could put GSEs on unsteady ground, FHFA chief says
WASHINGTON — Federal Housing Finance Agency Director Mark Calabria said Thursday that if the economic fallout from the coronavirus lasts longer than a few months, the agency might have to seek help from Congress or the Federal Reserve to support the government-sponsored enterprises.
Although Fannie Mae and Freddie Mac are currently equipped to handle an uptick in delinquencies, the mortgage giants are less prepared to do so over the long term, Calabria said.
“If this is a short-term event — say six to eight weeks — we believe that Fannie and Freddie and the servicers are equipped financially to be able to get through this time,” he said in an interview on CNBC. “If this goes beyond that, then we may be having to look for public assistance from Congress [or] from the Fed.”
FHFA on Wednesday directed Fannie and Freddie to suspend all foreclosures and evictions for at least 60 days for homeowners with mortgages backed by the GSEs. But Calabria added Thursday that the agency will “certainly roll out something larger if it looks like this crisis is going to go beyond that.”
FHFA is also urging any borrowers affected by the coronavirus to contact that mortgage servicer about loan forbearance. As long as borrowers in forbearance plans meet the terms of those plans, no negative information will be reported to the credit bureaus, Calabria said.
“We also have to understand that unlike during the crisis where there was so much emphasis on getting the housing market back, our emphasis today is dealing with the public health and hardship effects on the families,” he said.
So far, FHFA has not seen a decline in home prices, but has changed its forecast to reflect a “more flat price environment for the rest of the year,” said Calabria.
“If this does go on for a considerable amount of time, we may see some price declines,” he said. “But right now as opposed to the crisis, everybody wants to stay in their home. That’s the positive.”
Brendan Pedersen contributed to this article.