Compliance & Regulation

As real estate prices soared in recent years, working-class adults everywhere have increasingly relied on mortgages backed by the Federal Housing Administration — and U.S. taxpayers.

The $2 trillion deal passed by the Senate late Wednesday would aim to put banks and consumers alike on stronger financial footing as they weather the coronavirus pandemic.

The regulation issued late on Tuesday directs state-regulated financial institutions to give mortgage borrowers at least 90 days of forbearance if they can show financial hardship resulting from the coronavirus pandemic. It also requires banks and credit unions to provide relief on ATM fees and credit card late payment fees.

The central bank's sweeping actions suggest a cash shortage gripping sectors directly hit by the pandemic. Banks were supposed to be protected by Dodd-Frank but are still vulnerable to a funding domino effect.

Flagstar Bancorp, one of the nation's biggest lenders to mortgage providers, has stopped funding most new home loans without government backing.

With increased economic distress because of the coronavirus, lenders are likely to see an increase of borrowers looking for a mortgage rescission, arguing they are eligible for an extended filing time frame.

Refinancing activity is surging, existing borrowers are inquiring about loan modifications, loan closings are being delayed by more complex credit checks — and banks are short on people to handle it all.

Kansas Gov. Laura Kelly on Wednesday announced she was banning evictions and foreclosures for the next six weeks, adding to her administration's response to the unprecedented crisis caused by COVID-19.

FHFA Director Mark Calabria said the health crisis will complicate the release of a proposal establishing new capital requirements for Fannie Mae and Freddie Mac.

A proposal to tighten financial requirements for government-sponsored enterprise counterparties that sought to lower risk in a volatile market should be suspended, a group representing smaller lenders said, arguing it would aggravate current distress.