A coalition of real estate and banking trade groups is calling on Congress to help banks with liquidity as they allow homeowners to forbear their mortgage payments.

Industry leaders in the real estate sector are calling on the Federal Government to provide a liquidity facility to support a massive expected wave of homeowners requesting forbearance.

A liquidity facility is essentially financial support through the Federal Reserve’s purchasing of bonds or other assets, or direct lending, to create cash flow. In this case, it could be used to act as a lifeline at a time when many lenders are being asked to allow homeowners with government-backed loans to grant 90 days of forbearance.

Part of the CARES Act — the stimulus package aimed at revitalizing the slumping economy — includes mortgage forbearance for a period for the owners of single-family and multi-family homes with a government-backed mortgage.

A coalition of real estate and banking trade groups — which includes the National Association of Realtors, Mortgage Bankers Association, National Association of Home Builders and others — wrote a letter demanding the liquidity facility to support their efforts to allow homeowners the ability to forbear their mortgage payments.

“The established forbearance framework is appropriate, as it gets help to the most people as quickly as possible,” the letter reads. “But the scale of this forbearance program could not have been foreseen by mortgage servicers, or fully anticipated by regulators.”

“It is therefore incumbent upon the government to provide the final piece of the puzzle — a liquidity facility for single-family and multifamily servicers — to ensure that the entire industry can deliver much-needed economic relief to consumers through this unprecedented forbearance plan,” the letter continues. “While some servicers will not need assistance, many others will require temporary support to deliver forbearance at the scale and for the duration required.”

The letter’s authors claim that any delay in creating the liquidity facility could cause great volatility in the market. Mr. Cooper, a mortgage lender and servicer, said in a regulatory filing that 86,000 — or roughly 2.5 percent — of its customers were put on a forbearance plan after the passing of the CARES Act.

Jay Bray, the CEO of Mr. Cooper, told CNBC that he was told there would be federal liquidity to support servicers as part of the CARES Act.

“It’s frankly frustrating and ridiculous that we do not have a solution in place,” Bray told CNBC. “There is going to be complete chaos. We’re the largest non-bank. We have a strong balance sheet, but for the industry as a whole you’re going to start seeing problems soon.”

Email Patrick Kearns

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription