Senators Urge Treasury Secretary to Assist Mortgage Servicers

Several U.S. Senators urged Treasury Secretary Steven Mnuchin to address liquidity challenges facing mortgage servicers in order to prevent an "impending crisis" within the mortgage servicing sector.

In a joint letter, the Senators called for action under Section 4003 of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") (which section includes an appropriation of $455 billion for purposes of economic stabilization activities) in order to avoid a financial crisis within the mortgage servicing sector. They emphasized, among other things, that while liquidity provided under the CARES Act was entirely appropriate, businesses (i.e., mortgage servicers) required to provide widespread forbearance must be able to "survive to see it through." The Senators warned that the financial strain put on nonbank mortgage servicers may be so great that it could, as a result, negatively impact homeowners and the market. The Senators also stated that the Federal Housing Finance Agency and Fannie Mae and Freddie Mac (collectively, the "GSEs") should ensure their policies mitigate, rather than increase, the liquidity demands facing servicers, consistent with the mandate of the GSEs to serve all markets at all times.