When it rains, it pours. And the inevitable has finally come to pass with respect to the vulture capitalists whom operate as non bank servicers in the mortgage industry. Last week, Mark Calabria, director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, said in an interview on CNBC that a liquidity facility for servicers might be necessary after a few months – but not now. And that did not set well with the non bank servicers whom are not capitalized as well as FDIC insured financial institutions. Moreover, though, many are viewing Calabria as the Angel of Death when it comes to any hope for relief during the COVID-19 crisis.
Calabria estimated there could possibly be 2 million borrowers missing payments by the end of May. But forbearance requests have already topped 2 million, according to a report released Tuesday by the Mortgage Bankers Association.
Building upon that, Calabria is now saying servicers won’t need help for at least a year. He told The Wall Street Journal on Tuesday that he has seen no evidence to suggest that there’s a systemic crisis for nonbank servicers. He called the industry’s concern “spin.” Calabria went even further, though, and stated that if there were problems Fannie Mae and Freddie Mac may simply step in and assume control of the mortgages which non banks were unable to handle do to their lack of capitalization. Calabria’s estimate of 2% forbearance on loans is in direct contravention to what many industry experts, including Moody’s Chief Economist, Mark Zandi. Zandi is predicting up to 15 Million homes in forbearance should the Crisis continue through the Summer.
As many as 30% of Americans with home loans — about 15 million households — could stop paying if the U.S. economy remains closed through the summer or beyond, according to an estimate by Mark Zandi, chief economist for Moody’s Analytics.
They are not alone, though. The hotel industry is also in dire straights,
The occupancy rate of hotels declined to 22% in the week ending April 4, and the rate fell under 20% in many of the largest markets, according to STR. “We assume the next shoe to drop will be further hotel closures where running sub 20% occupancy is unsustainable,” according to a research note from SunTrust Robinson Humphrey.
The commercial side of things is expected to be even worse.