April 21, 2020 at 7:25pm | Mac Rogers
Hey guys this is an update to my video yesterday regarding the new proposal for more stimulus money in addition to the CARES Act.

I will also include an update on forbearance as there's some news in that front as well.

I'm Mac with Albert Rogers Realty. I'm a real estate broker here in Castro Valley CA. If you are new to this channel, or just stumbled on it I regularly give real estate market updates as well as other financial market updates that may affect real estate. More so now that we have this pandemic as things are changing rapidly. If you want to be updated click subscribe like and follow.

Anyway, on my video yesterday I mentioned that the PPP or payroll protection program and EIDL or economic injury disaster loan was all used up and that there was a proposal to replenish it. Well good news.

It just passed the U.S. Senate. The House is expected to take up the measure later this week.

Under the new proposal the Paycheck Protection Program (PPP) will receive $310 billion in new cash, while the Economic Injury Disaster Loan (EIDL) fund will receive an additional $50 billion.

The bill sets aside $60 billion of PPP funding exclusively for small and medium-sized community banks.

The Senate bill also contains $25 billion for coronavirus testing and $75 billion for hospitals. So good news on that front.

Now on forbearance, I also did a video on this when it first came out as well as an update on how some lenders were administering the program.

Basically the initial reports that I heard from some clients and people in the industry was that their lender were granting forbearance of up to three months, six months or twelve months and then at the end of the period all the pass due payments whether that was 3-6 or 12 months, the whole amount was due and payable.

Well that doesn't necessarily help if you were affected by COVID-19 right?

Now the issue with this is that servicers, the company that you send your monthly mortgage payment to still has to send money to the bond holder or investor holding your mortgage note, regardless of whether they receive payment or not. So if you don't pay for twelve months, they are still paying out twelve months to bond holders.

If you can imagine thousands of home owners requesting for forbearance, obviously these servicers will run out of money right away.

The servicers have been requesting help from the government so that they can accommodate all the forbearance requests due to covid-19.

What that basically meant was they need money to pay the bond holders and this is also the reason why servicers were granting forbearance and then saying we need to get paid in full at the end of the period because they need liquidity. It's not that they dont want to help.

Here's the good news. Aren't you just thankful that you clicked on this video. I'm just bringing you all good news!

All kidding aside as of today , the FHFA (Federal Housing Finance Agency) they are the one overseeing Fannie Mae and Freddie Mac, they stepped in to help servicers who collect payments on loans that are backed by Fannie Mae and Freddie Mac.

Now the thing is, they are not actually providing liquidity or money to do this, if you want to read the full story its on the housing wire website. It goes into more detail about how this whole thing should transpire.

The jist is that basically FHFA told the servisers that they are only obligated to pay the investors or bond holders up to four months for loans that are in forbearance.

Now what does this mean for Joe & Jane Smith the consumer, right? Well this means that now under the new policy, servicers will not be required to pay the bond holders on the fifth month of missed payments for loans in forbearance.

So theoretically this change in policy should now create better options than what is being currently offered by lenders/servicers because on the fifth month, if you are still are affected by COVID-19 and miss your payment again, the servisers are not on the hook to pay the bond holders. So hopefully this starts helping out struggling home owners affected by COVID-19

I would also remind you to please make sure you are talking to your lender/servicer and making sure you understand what it is that they are offering you.

If you have additional questions about mortgage forbearance, please call me directly or comment below.

If you have any questions or need help with figuring out what or how this coronovirus pandemic is affecting your homes value, please comment below or reach out to us.

Have a great day and stay safe.
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