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58 delinquencies that we saw during the Great Recession. We have seen some very promising outcomes because we got together with Fannie and Freddie and directed them to put in place a new home retention option called a Payment Deferral. When we look at the outcomes, about 30% of loans that were in forbearance have utilized the payment deferral or modification option. We have seen recently an increase in some of the trial modifications, but 30% have also had refinances or sales. About a third of those participated in loss mitigation post- forbearance, but about 20% cured right after their forbearance period ended. Many of them even paid while they were on forbearance. We were pleasantly surprised at that. It goes back to the first topic I mentioned, the Adverse Market Fee. We were expecting significant losses. It's a real testament to the work that Fannie and Freddie and the industry did to put together loss mitigation options that work, and specifically, the payment deferrals and the other modifications that were utilized throughout the pandemic. Having an ultimate solution that results in increased home retention is important. Foreclosure is expensive, it's a very lengthy process, and it's disruptive. We understand that sometimes people get in trouble, so we focus on home retention options. We want to make sure that servicers and the Enterprises are looking at solutions that keep borrowers in their home and able to pay their mortgages. Do you anticipate that any of these programs and changes that were implemented due to the pandemic may become permanent? We've been working for years on developing effective loss mitigation programs for use in a crisis. Certainly, we work with HUD and Treasury to maintain some very strong loss mitigation programs. We're going to examine how these programs have performed, and identify the lessons learned from the programs, as we've done on the origination side. Like accessibility: it is key to ensure that there's a simple process in place for homeowners to seek mortgage assistance. We want to make sure that as many homeowners as possible can easily obtain the needed and appropriate level of assistance. It also has to be affordable. We also want to make sure that homeowners have meaningful payment relief that addresses their specific needs. A second important lesson is that homeowners need to work with their servicer to make sure that the modification results in a significant payment reduction. We have found that payment relief or payment reductions were what works best. e third thing that I'll talk about is sustainability. We need to make sure that the solutions are designed so they can work in the long term, so they're not just a stopgap measure that works for a few months, or that we are just kicking the can down the road. ere are a number of stakeholders involved and making sure that these solutions provide meaningful impact for the borrower, servicer, and investor is important to us. Transparency is another important factor: just making sure that the process is easy to understand, and that people are aware of it. And that borrowers understand how to use each product and can figure out the options are available. And then there's accountability. We want to make sure there's an appropriate level of oversight of loss mitigation programs and processes so that borrowers can obtain mortgage assistance that results in protection for all the parties. From our perspective, as long as we have these guiding principles of accessibility, affordability, sustainability, transparency, and accountability, I think we'll be in really good shape. We've taken a number of actions since the pandemic started in March 2020, and we've focused on expanding our loss mitigation toolkit to make them easy to implement. Our loss mitigation tool kit was informed by our experience with natural disasters. e Enterprises' COVID-19-impacted borrowers started receiving aggressive and simplified solutions on an expedited basis because we had a lot of this already in place. We were really pleased with the timeliness with which we were able to roll these programs out and get them ready for servicers to implement and borrowers to use. We're going to continue to monitor these programs, and we'll adjust as necessary. It was a good learning opportunity for us, and I think it will result in some good loss mitigation strategies for borrowers. Is the FHFA considering any specific lending requirements or initiatives designed to address either explicit or implicit racial bias when it comes to the mortgage lending process? I'll start off by saying at FHFA, we don't tolerate housing discrimination. e mortgage lending process impacts all Americans, and we want to continue to make sure that all borrowers have equitable access to programs and products that are offered by Fannie Mae and Freddie Mac. Housing discrimination is just not going to be tolerated. We participate in the Interagency Task Force on Property Appraisal and Valuation Equity, called PAVE. e task force is led by [HUD] Secretary Fudge and [Ambassador Susan Rice, Director of the Domestic Policy Council]. ey're working to promote policies that advance equity and home valuations, including considering alternatives to traditional appraisals. One of the things that we did at FHFA back in 2018, we created an Office of Fair Lending Oversight, and spent 2019 staffing that office. So, we've been working on this for a while. Cover Story "We want to make sure that servicers and the Enterprises are looking at solutions that keep borrowers in their home and able to pay their mortgages." By: David Wharton

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