Yale School of Management

Posts by Mortgages

Debt Mounts for US Retail and Lodging Mortgagors

June 18, 2020
Government-mandated shutdowns in response to the novel coronavirus have triggered delinquencies among commercial mortgages as businesses struggle with revenue. The purpose of this article is to characterize the risks to US commercial real estate posed by COVID-19 responses. Due to reporting incentives, data on mortgages packaged into commercial mortgage-backed securities (CMBS) is more accessible and granular than data on the whole commercial mortgage market. Even though CMBS-associated properties constitute just 20% of outstanding multifamily and commercial debt, the data generated by such properties can indicate how the whole commercial real estate sector may be affected. On June 4, commercial real estate research firm Trepp reported its largest jump in delinquencies among mortgages involved in the $1.4 trillion CMBS market, with the rate spiking from 2.29% to 7.15%. Continue reading “Debt Mounts for US Retail and Lodging Mortgagors”

FHFA Allows Payment Deferral for Forbearance Payments While Extending Foreclosure and Eviction Moratoria

May 26, 2020
On May 13, the Federal Housing Finance Agency (FHFA) announced that homeowners who take advantage of COVID-19 mortgage forbearance will have the option to defer payment of the missed amounts until the home is sold or refinanced, or the mortgage matures, once they return to making their normal monthly mortgage payments. The next day, the FHFA announced an extension of its foreclosure and eviction moratoria to June 30. Continue reading “FHFA Allows Payment Deferral for Forbearance Payments While Extending Foreclosure and Eviction Moratoria”

FHFA Allows Federal Home Loan Banks to Take PPP Loans as Collateral

May 8, 2020
On April 23, the FHFA announced that Federal Home Loan Banks (FHLBs) could take Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration as collateral for their advances providing some financial institutions two channels through which to finance such loans. Continue reading “FHFA Allows Federal Home Loan Banks to Take PPP Loans as Collateral”

FHFA Relaxes Standards for GSE Mortgage Servicers

April 29, 2020
On April 21, the Federal Housing Finance Agency (FHFA) announced that it was changing standards for mortgage servicers in an effort to reduce burdens brought on by drastic increases in mortgage nonpayment. Quickly following, on April 22, the FHFA announced that Fannie Mae and Freddie Mac would purchase some mortgages in forbearance due to COVID-19. Continue reading “FHFA Relaxes Standards for GSE Mortgage Servicers”

Residential Mortgage and Rent Relief During Crises

April 16, 2020
Cash flows around the world have dropped dramatically as more governments require non-essential businesses to close and  individuals to stay at home in order to fight the COVID-19 pandemic. In a fairly short time, such actions have led to massive layoffs and job losses. In the United States, for example, the country has swung from historically low unemployment levels to historically high numbers of claims for unemployment benefits; similar effects can be observed in other countries.  As a consequence, individuals are experiencing, and are expected to continue to experience for some time, difficulty in paying their housing costs. Whether mortgage or rent, housing is usually the largest fixed cost for households and many governments have responded by announcing various packages to provide relief. This post begins by examining the fundamental challenge presented by the need to provide residential expense relief on a grand scale. It then details multiple programmatic interventions utilized in crises past and present. Finally, this post provides some key takeaways to consider when implementing residential expense relief policies. Continue reading “Residential Mortgage and Rent Relief During Crises”

Mortgage Forbearance and Housing Expense Relief in Response to the COVID-19 Outbreak

April 7, 2020
With US unemployment claims at record highs due to the nation’s directive to close many businesses and shelter-in-place, many individuals are struggling to pay recurring fixed costs, such as mortgages and rent. In response, the United States instituted the CARES Act, providing opportunities for mortgage forbearance and moratoria on evictions for all holders of federally backed loans. Other countries have instituted similar policies, but with varying time-frames and coverage for homeowners and renters. Continue reading “Mortgage Forbearance and Housing Expense Relief in Response to the COVID-19 Outbreak”