Real Estate

Potential wave of mortgage delinquencies could bankrupt payment system


Rows of houses in Las Vegas.

Jacob Kepler | Bloomberg | Getty Images

Last week the regulator for mortgage giants Fannie Mae and Freddie Mac announced a forbearance program for borrowers unable to pay their loans because of the effects of the coronavirus.

The Department of Housing and Urban Development, which includes the FHA loan program, announced the same. That is a huge relief for borrowers, who can now delay payments without penalty. Unfortunately there’s a hitch. 

The mortgage servicers, the companies that collect monthly payments, are required to pass those payments on to the investors who own those loans in mortgage-backed securities even if the borrowers don’t pay. Servicers also…


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