Mortgage Companies Cash in on Pandemic Relief | WHAT REALLY HAPPENED

Mortgage Companies Cash in on Pandemic Relief

By Doug French

Ben Eisen writes for the Wall Street Journal, “Mortgage companies have ramped up their purchases of government-backed mortgages in forbearance, and they are selling these loans back to investors at a profit.”

In a bit of pandemic crony capitalism, mortgages made through the FHA (Federal Housing Administration) or the VA (Department of Veterans Affairs) are pooled together into Ginnie Mae bonds. If a borrower stops making payments, Ginnie Mae allows the mortgage servicer to buy the mortgage out of the pool after ninety days at face value. So, even though the loan is in default, servicers buy the loan for the amount of the principal owing and any interest owed. In a free market, this paper would sell at a discount. But the government mortgage market is anything but laissez-faire...

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