Virtual Hearing - Protecting Homeowners During the Pandemic: Oversight of... (EventID=110899)

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Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/FinancialDems/ Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Thursday, July 14, 2020, from 12:00 p.m. (ET) Subcommittee on Oversight and Investigations Green Sherman and Ranking Member Barr will host a virtual hearing entitled, “Protecting Homeowners During the Pandemic: Oversight of Mortgage Servicers’ Implementation of the CARES Act." - - - - - - - - Witnesses for this one-panel hearing will be: • Alys Cohen, Staff Attorney, National Consumer Law Center • Marcia Griffin, Founder and President, HomeFree-USA • Donnell Williams, President, National Association of Real Estate Brokers • Ed DeMarco, Ph.D, President, Housing Policy Council Overview The widespread shutdown of economic activity across the United States in response to the COVID-19 pandemic resulted in millions of individuals losing their jobs and becoming unable to make their mortgage payments. Nationwide, nearly 33 million people claimed unemployment benefits for the week ending June 20, 2020. Only 1.6 million people claimed unemployment benefits for the same time period in 2019. As of the end of May, 7.76 percent of American mortgages were a month or more past due, the highest rate since 2011. Similar to the 2007-2008 Financial Crisis, the pandemic and its economic fallout have disproportionately affected low- and moderate- income Americans and communities of color. Data obtained from a nationally representative survey revealed higher rates of delinquent rent and utility payments and higher eviction rates among low- and moderate- income homeowners and renters during the pandemic. The economic impact of the COVID-19 health pandemic will most likely exacerbate economic inequities and expand the racial wealth gap. Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020, in part to provide protections for homeowners facing economic hardships due to the pandemic. Section 4022 of the CARES Act provides borrowers with federally-backed mortgages up to 360 days of forbearance and established a 60-day moratorium on foreclosures. Prior to the passage of the CARES Act, the Department of Housing and Urban Development (HUD), the U.S. Department of Agriculture (USDA), the Department of Veterans Affairs (VA), Fannie Mae, and Freddie Mac (collectively the “Enterprises”) issued similar guidance requiring or encouraging temporary foreclosure suspensions. To qualify for a forbearance under the CARES Act, borrowers must affirm they are experiencing economic hardship due to the COVID-19 pandemic, but no additional documentation is required. The Act requires that servicers provide forbearance for up to 180 days with the option to extend the forbearance up to an additional 180 days at the borrower’s request. The forbearance plan may be shortened at the borrower’s request. Furthermore, the servicer may not charge fees, penalties, or interest beyond what a borrower would have paid if they had made payments as originally scheduled. Section 4022 of the CARES Act also mandated a suspension on the initiation and completion of all judicial and non-judicial foreclosures on federally-backed mortgages.14 The CARES Act initially provided for a 60-day foreclosure moratorium, starting on March 18, 2020. However, individual agencies have administratively extended foreclosure and eviction moratoria for federally-backed mortgages through August 31, 2020, separate from the provisions of the CARES Act. While the protections in the CARES Act do not cover all residential mortgages in the United States, federally-backed mortgages represent about 70 percent of outstanding single-family mortgages and increase opportunities for homeownership among low- and moderate- income borrowers. As such, the CARES Act has helped millions of Americans, as nearly 4.2 million mortgages, or approximately 8.39 percent of all mortgages in mortgage servicers’ portfolios, were in forbearance as of June 28, 2020. The Health and Economic Recovery Omnibus Emergency Solutions Act (the Heroes Act) passed by the House on May 15, 2020, would extend to all homeowners the foreclosure moratorium for six months as well as CARES Act forbearance protections. Regulatory Guidance Fannie Mae and Freddie Mac have at times provided inconsistent and potentially confusing guidance regarding the CARES Act forbearance protections. While noting that the CARES Act provides for an initial forbearance period of up to 180 days that may be extended to up to one year of total forbearance, Fannie Mae issued guidance on April 8, 2020 indicating that servicers “may provide an initial forbearance period, and any extended forbearance period, in separate, shorter increments. If the borrower's COVID-19... Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=406734