InfoBytes Blog
FHFA’s Calabria discusses housing market with Senate Committee
On June 9, Federal Housing Finance Agency (FHFA) Director Mark Calabria testified before the Senate Committee on Banking, Housing, and Urban Affairs on the state of the housing market due to the Covid-19 pandemic. In his published statement, Calabria noted that at the start of 2020, the housing market was in a “strong position,” but “in response to Covid-19, financial markets endured a severe dislocation in March.” According to the statement, home prices have remained supported, as drops in demand have been balanced by a decrease in inventory. The statement also provides an update on FHFA’s policy responses to the Covid-19 pandemic. With regard to forbearances, Calabria acknowledged that forbearance rates were predicted to reach 25-50 percent; however, internal data indicates that “[e]nterprise forbearance rates remain manageable.” Specifically, the 30-60 day combined delinquency rate for borrowers with loans in Enterprise mortgage-backed securities “remains below the estimated rate of forbearance,” with Calabria commenting that some borrowers “who have requested forbearance are nonetheless continuing to make payments on their loan.” At the hearing, in response to a question asking if the FHFA plans to extend the foreclosure moratorium past June 30, Calabria noted that the agency is considering extending it “a month at a maximum” and would be “making that announcement certainly within a week.”
Calabria also discussed FHFA’s re-proposed capital rule for the Enterprises (covered by InfoBytes here). His statement notes that “Fannie and Freddie lack the capital to withstand a serious downturn in the housing market,” and the re-proposed rule would “help each [E]nterprise become safe and sound to fulfill its statutory mission across the economic cycle.”