June 16, 2020

Passing the Hot Potato of Forbearance


So, what do you do if you are an arm of the federal government that has to manage your own balance sheet and yet implement the Congressional mandate under the CARES Act to provide forbearance to borrowers with federally-backed loans? Add to that, these borrowers only need to state they are experiencing a negative impact resulting directly or indirectly, from COVID-19. Who should bear the risk of government mandated forbearance—the government or private parties or some sharing of risk between the two? 

This Of Special Interest provides more detail on post-origination, pre-loan sale/insurance endorsement consequences resulting from borrowers who qualified for a loan as of loan closing but then seek forbearance soon thereafter.

This article was first published in and is reproduced with the kind permission of HousingWire.

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