How the Fed Can Prevent a Mortgage Crisis

How the Federal Reserve Can Help Prevent a Mortgage Crisis

According to CNN Business, unless the Federal Reserve provides more emergency lending, a surge in missed mortgage payments could crash the real estate market. This is because, even though homeowners are being provided forbearance on their mortgage from the Coronavirus Relief Bill, the mortgage servicers are still required to pay principal and interest on the mortgages to investors. It’s likely that, as of right now, mortgage servicers don’t have enough cash to cover all of the missed payments. There’s a real threat of these defaults creating a housing crisis.

 

So, what’s next for mortgage servicers? This article explains how the Fed will invoke emergency powers to prevent a credit crisis.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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Joe Fairless