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As America heads into a deep recession, the $11 trillion residential-mortgage market is in crisis. Investors who buy home loans packaged into bonds are dumping even those with federal backing because of panic that millions might not make their payments, Bloomberg News reported. Yet one risky sector had started to show cracks long before the coronavirus pandemic sparked the worst financial meltdown in 12 years: the federal government’s largest affordable-housing program, whose lenient terms are geared toward marginal borrowers. As real estate prices soared in recent years, working-class adults everywhere have increasingly relied on mortgages backed by the Federal Housing Administration — and U.S. taxpayers. Since 2007, the FHA’s portfolio has tripled in value to more than $1.2 trillion, almost 11 percent of the market. While private lenders make these loans, they are packaged into Ginnie Mae bonds, common in mutual funds and pensions. FHA borrowers are likely to struggle even more than other homeowners. Before Covid-19 started roiling China, a November FHA report found that 27 percent of borrowers last year spent more than half their incomes on debt, a level it describes as “unprecedented.” The share of FHA loans souring in their first six months has doubled over the last three years to almost 1 percent. 

Major U.S. retail and restaurant chains, including Mattress Firm and Subway, are telling landlords they will withhold or slash rent in the coming months after closing stores to slow the coronavirus, Bloomberg News reported. In a brewing fight, chains are calling for rent reductions through lease amendments and other measures starting in April. These moves mark the next phase in virus fallout: What happens to billions in rent owed for businesses that have been closed? The stakes are high. Retail has a slew of big chains in turnaround mode. And if they do withhold payments, there would be a ripple effect. Landlords can’t afford to stop collecting rent for long, with many property owners sitting on loads of debt. The situation is likely to get messier. The U.S. relief packages being considered don’t directly address rents. But the Federal Reserve’s actions may give banks the leeway to defer mortgage payments, allowing property owners to delay rent. It’s also unclear if retailers can declare a so-called “force majeure,” a contract clause that covers highly unusual events, and if landlords could then make the same case to insurers. “The court system is just going to get flooded with a million of these disputes between tenants and landlords,” said Vince Tibone, an analyst at Green Street Advisors. “If the government doesn’t step in in any form or fashion, it could get ugly. They need to respond quickly.”

Mortgage companies are bracing for a severe cash crunch when Americans who lose jobs and income because of the coronavirus pandemic stop making payments on their home loans, the Wall Street Journal reported. The companies, such as Quicken Loans Inc. and Cooper Group Inc., expect a wave of missed payments from borrowers as early as next month that will force them to come up with tens of billions of dollars on short notice. “It’s going to be a liquidity tsunami,” said Jay Bray, chief executive of Mr. Cooper, one of the biggest such companies, which process mortgage payments on behalf of investors. The mortgage firms are on the hook to continue paying principal and interest on the mortgages they service even if homeowners are in arrears. They are lobbying Congress and the Trump administration to establish a lending facility to help finance the billions of dollars of payments they will be obligated to make. Such a facility would ensure that millions of Americans could obtain “forbearance” agreements allowing them to miss some mortgage payments and make them up at a later date. Fannie Mae and Freddie Mac announced last week that they would suspend for at least 60 days foreclosures and evictions of homeowners who fall behind on their mortgage payments. They have also set up plans for borrowers harmed by the virus to work out a repayment plan over the course of up to a year.

The financial shock from the coronavirus pandemic threatens the housing security of millions of Americans, prompting federal, state and local officials — and even judges and the police — to move quickly to ward off foreclosures and evictions, the New York Times reported. Yesterday, the federal agency overseeing Fannie Mae and Freddie Mac, the giant government-run finance firms that back the mortgages of 28 million homeowners, ordered a suspension of foreclosures and foreclosure-related evictions for at least two months. The move is meant to keep people in their homes and avoid a housing squeeze like the one that followed the mortgage-fueled financial crisis of 2008. And over the past week, there has been a groundswell across the country to protect renters as well. The Miami-Dade police in Florida said that they wouldn’t carry out evictions during the health crisis. A high-ranking New York State judge declared that the courts would consider no eviction cases until further notice. Gov. Gavin Newsom of California issued an executive order allowing cities to impose eviction moratoriums.

Businesses across the country have ground to a halt because of the coronavirus outbreak, leaving millions of Americans wondering how they will make their next mortgage payments. Their lenders may soon say they don’t have to worry — for a while, at least, the New York Times reported. A broad group of bankers and other mortgage industry participants is working on a plan to offer a temporary pause in payments on home loans, according to the Housing Policy Council, a trade group that includes Citigroup, Wells Fargo, JPMorgan Chase and Quicken Loans. Details were still being decided, but the plan would allow borrowers to stop paying for as long as the public health and economic disruptions lasted, said Ed DeMarco, the chief executive of the council. Once the economy gets going again, borrowers would resume making payments. DeMarco said that he had been talking with banks, servicers and mortgage bond investors to complete the details of the policy. He said that it was not clear when the plan would be announced, but that the group wanted it in place by April 1.

As the coronavirus continues to spread, companies, government agencies and organizations across the nation are responding, HousingWire.com reported. Miami-Dade County Mayor Carlos A. Gimenez yesterday declared a state of emergency in the county. As a result, the Miami-Dade County police will temporarily suspend eviction notices until further notice. And the Florida county is not alone in these actions. According to the <em>San Jose (Calif.) Mercury News</em>, the city is moving forward with a moratorium on evictions. The moratorium, which is expected to receive final approval from the San Jose City Council in the next few weeks, will be in effect for at least 30 days. San Jose council members will also consider adding small businesses under commercial leases to the eviction moratorium at their meeting next week. In addition, they will consider setting aside a pool of additional public funds for San Jose renters and small businesses to access if needed to meet their rent payments. This comes on the heels of FHFA and FHA reminding servicers that mortgage relief options exist as coronavirus spreads. Fannie Mae also sent out an email on March 5, reminding borrowers about forbearance opportunities if they are impacted by COVID-19.

After two decades of false starts and setbacks, the grand opening of the American Dream mega-mall’s hundreds of retail stores, restaurants and DreamWorks water park is set to take place March 19. But the ribbon cutting comes as the deadly coronavirus spreads through the U.S., causing New Jersey’s first fatality, and a growing number of Americans are avoiding crowded spaces, Bloomberg News reported. The outbreak is the latest hurdle for the $5 billion complex next to MetLife Stadium in East Rutherford, N.J. These have included developers pulling out, a partially collapsed roof, funding shortfalls, delayed opening dates and the loss of two high-profile tenants to bankruptcy months before it was slated to debut. On Tuesday, New Jersey announced its first death from coronavirus — in the same county where the mall is located. Across the Hudson River in New Rochelle, New York, the National Guard is being sent to close large public gathering spaces in an effort to slow the spread of the outbreak. And the Centers for Disease Control and Prevention is warning at-risk populations to avoid crowds. Still, American Dream is moving forward with its plan to open the water park and retail portion. “It’s just bad timing,” Gabriella Santaniello, founder of retail consulting firm A Line Partners, said. “They are really in a predicament. There are just things beyond their control.”

The National Museum of American Jewish History filed for chapter 11 protection yesterday seeking relief from what museum officials characterize as a crushing debt burden incurred by construction of its home on Independence Mall, the Philadelphia Inquirer reported. In papers filed with U.S. Bankruptcy Court in Philadelphia, the museum said that it owed a little more than $30 million to bondholders and about $500,000 to unsecured creditors. he Bridgehampton National Bank on Long Island holds about $16.4 million of the museum’s debt; a sheaf of donors and lenders who backed the museum’s mall construction in the years preceding the building’s completion in 2010 holds about $14 million. “Our museum, since it’s open, has been lugging around over $30 million of debt and it is a weight on our shoulders that we have to get rid of,” Phil Darivoff, chair of the museum’s board of trustees, said in an interview. “It affects the way donors look at us. It affects our confidence in our future. And frankly, the debt service is too big a burden for us.” Officials said that the bankruptcy proceedings would not affect museum operations or staffing.