Is The CARES Act Making Everyone Happy? Here’s What Many Have To Say

Almost 3 million people with their own houses have benefitted from a program designed to provide assistance and relief to people who have bought mortgages from the government. The relief provided to the homeowners is included in the coronavirus relief package program called CARES Act. The number represents almost 6% of the existing mortgages, as calculated by the mortgage data and analytics company Black Knight—a company that tracks the growing number of mortgages on a daily basis.

The CARES act is taking care of mortgage holders

The program assists people and provides the homeowners with the relief to defer their mortgage payment for almost a year. These payments will then be stacked at the end of the loan or will be adjusted in the mortgage modification.

The offer will only apply to people who will tell their mortgage providers that due to financial hardships amid the coronavirus, they cannot pay their mortgage on time. The program poses no pressure on anyone and does not require any proof or document in support of their claim.

Borrowing loans will be an issue in the coming months

Even if the borrowers don’t make their monthly payments, the people who collect their money still have to calculate the principal and interest amount on the payments and forward it to the lenders.

While taking into account the current level of tolerance, the mortgage providers will still need to provide $2.3 billion every month to the bondholders. Almost $1 billion in funds will be lost every month by people who are holding securities and bonds from private lending institutions.

Treating everyone equally

Although Ginnie Mae is backing up the FHA loans and has opened up a relief fund, the Fannie Mae and Freddie Mac have nothing in stock currently. The FHFA director has raised a voice against the relief fund and said that it is not necessary. Everyone in the mortgage industry is raising concerns about the ongoing situation and is sending letters to the Treasury Department to set up the facility for private lending institutions too.

Jay Bray, the CEO of America’s largest mortgage provider, has said that he consulted with the Trump administration to devise a bailout plan, but they didn’t make it into the Act. He said that the government was acting on the Act and had liquidity in it too, but they did not make it into the Act. When inquired, he was told that the situation would be handled through the administration, but this is the real problem, and the government must be prepared to prevent a liquidity shortfall and should serve everyone equally.