There has been a sharp spike in the number of mortgages in forbearance as the COVID-19 pandemic drags on, according to the Mortgage Bankers Association.
New data released by the MBA shows that the total number of loans now in forbearance increased from 7.54% of servicers’ portfolio volume in the prior week to 7.91% as of May 3, 2020. According to MBA’s estimate, almost 4 million homeowners are now in forbearance plans.
Mortgages backed by Ginnie Mae again had the largest overall share of loans in forbearance by investor type (10.96%). The number of loans in forbearance for depository servicers rose to 8.75%, while the number of loans in forbearance for independent mortgage bank (IMB) servicers increased to 7.54%.
“With the calendar turning to May, the share of loans in forbearance increased, but the pace of the increase and incoming forbearance requests continued to slow,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The dreadful April jobs report showed a decline of more than 20 million jobs, and a spike in the unemployment rate to the highest level since the Great Depression. It will not be surprising if the forbearance numbers continue to rise. As we anticipated, FHA and VA borrowers have been most impacted by the job losses thus far, with the share of Ginnie Mae loans in forbearance at almost 11 percent.”
Added Fratantoni, “Although the pace of forbearance requests slowed this week, call volume picked up – which could be a sign that more borrowers are calling in to check their options now that May due dates have arrived.”
MBA’s latest Forbearance and Call Volume Survey covers the period from April 27 through May 3, 2020, and represents almost 77% of the first-mortgage servicing market (38.3 million loans).
Your850 continues to advise borrowers to carefully read any mortgage forbearance contract, and use it only as a last resort. Many borrowers are finding that deferred payments must be repaid in a lump sum at the end of the forbearance period.
Source: MBA news release.