"Absent a liquidity facility, many nonbank servicers will run out of money and face insolvency as the number of forbearance requests increases, turning the COVID-19 economic shock into a systemic mortgage market crisis." https://www.urban.org/sites/default/files/publication/102003/liquidity-vehicle-for-mortgage-servicing-advances-is-in-consumers-best-interest.pdf

"Nonbank servicers are not stand-alone monolines... If one or more large servicers were to fail, origination capacity would be taken out of the system."

"Moreover, this issue is systemic, as all nonbank servicers face the same liquidity risk, making it unlikely that only one would fail. The result would be tight credit, which will make it difficult and more expensive for current homebuyers to refinance...."

If one in four families with a mortgage takes Congress up on their offer of mortgage forbearance for six months, mortgage servicers will have to cover payments of more than $70 billion. Servicers had total net profits of less than $10 billion last year https://www.cnn.com/2020/04/10/perspectives/mortgage-payments-coronavirus-housing-crisis/index.html

Good thread here on how many of these issues were identified and warned about by some researchers/regulators but the industry that is now asking for aid previously resisted tougher capital rules https://twitter.com/dismalscience/status/1248707072448966661?s=21 https://twitter.com/dismalscience/status/1248707072448966661