House Vote Scheduled Today on $2 Trillion Stimulus Bill; What it Means for MBA Members

The House is expected to vote today on a massive $2 trillion stimulus bill aimed at injecting a much-needed boost to a U.S. economy that has been staggered by the coronavirus pandemic.

The 800-plus page bill, known as the CARES Act (Coronavirus Aid, Relief and Economic Security), cleared the Senate late Wednesday night by a 96-0 vote. Mortgage Bankers Association President and CEO Robert Broeksmit, CMB, commended the Senate and urged the House to act quickly to pass the bill, which he said would benefit the millions of Americans negatively affected by COVID-19.

“We deeply sympathize with those who are struggling due to this pandemic,” Broeksmit said. “Fortunately, there are specific provisions in this package to provide programs for those who need assistance. “Importantly, this legislation includes funding that can be leveraged to create a broad, dedicated Federal Reserve liquidity facility. It is critical that the Federal Reserve and U.S. Treasury swiftly establish a financing program to help some mortgage servicers provide the unprecedented levels of mortgage payment forbearance required under the legislation to help homeowners facing COVID-related hardships.”

Broeksmit urged the House and President Trump to move the bill into law “to ensure that borrowers, renters and small businesses are properly supported and protected during this pandemic.” 

Bill Highlights:

As it relates to mortgage forbearance, the most important language in the bill is on pages 567-570 (single-family) and 570-574 (commercial/multifamily).

Liquidity Facility: $454 billion for loans, loan guarantees and investments in programs or facilities established by the Federal Reserve for the purposes of providing liquidity to the financial system that supports lending to eligible businesses, states, or municipalities. This funding would enable Treasury and the Fed to establish a liquidity facility for loan servicers to access for advancing payments; MBA continues to press hard on all fronts for a speedy announcement of such a facility.

Consumer Right to Request Forbearance: Applies to federally backed mortgage loans (Fannie Mae/Freddie Mac/FHA/VA/USDA) for those directly or indirectly impacted by the COVID-19 virus (if the borrower requests and affirms hardship). No signature or documentation is required, and the initial period is up to 180 days initially, with the option to extend for up to an additional 180 days.  This broadly mimics the programs Fannie Mae and Freddie Mac have already announced.

Multifamily Mortgage Forbearance: A total of 90 days of forbearance (30-day forbearance on initial request, extendable for two additional 30-day periods), which applies to federally insured, guaranteed, supplemented, or assisted mortgages, including mortgages purchased or securitized by the GSEs.

Moratorium on Evictions: For 120 days after date of enactment, applies to single-family and multifamily properties that participate in federal housing, homelessness, rural programs, or properties financed by federally insured, guaranteed, supplemented, or assisted mortgages, including mortgages purchased or securitized by the GSEs.

Small-Business Assistance: $349 billion for SBA loans to help small businesses make payroll and pay rent and mortgage payments, with loans of up to $10 million. Proceeds may be used for payroll, rent, payment of mortgage interest (not principal), and utilities.

HUD Rental Assistance

  • $5 billion for Community Development Block Grants
  • $4 billion in homelessness assistance
  • $1.25 billion in tenant-based assistance
  • $1 billion in project-based assistance
  • $50 million for housing for the elderly
  • $15 million for housing for persons with disabilities

Temporary Lending Limit Waiver: Nonbank financial companies temporarily included in OCC’s lending limits waiver

CECL: Option to temporarily delay Current Expected Credit Losses application. Applies to insured depositories (including credit unions).

Troubled Debt Restructurings: Financial institution may elect to suspend TDR determination under GAAP for COVID-19-related loan modification.

Community Bank Leverage Ratio: Agencies to temporarily reduce the CBLR for qualifying community banks from 9 percent to 8 percent.

Debt Guarantee Authority: FDIC authorized to temporarily establish a debt guarantee program to guarantee debt of solvent insured depositories and depository institution holding companies.

MBA NewLink will provide updates as they happen.