Requests for forbearance have seen significant growth as borrowers affected by COVID-19 seek immediate mortgage relief.
Findings from the Mortgage Bankers Association's latest survey showed that forbearance requests grew by 1,270% between the week of March 2 and the week of March 16, and another 1,896% between the week of March 16 and the week of March 30.
The total number of loans in forbearance was also on the rise, up from 0.25% to 2.66% from March 2 to April 1. Of these loans, Ginnie Mae-backed mortgages experienced the biggest growth, up from 0.19% to 4.25%.
As of April 1, the total percent share of mortgages in forbearance came in at 2.73%. Independent mortgage bank (IMB) servicers have the largest share of loans in forbearance at 3.45%, while loans in forbearance made up 2.24% of banks’ servicing portfolio volume.
"The mortgage industry is committed to providing this much-needed forbearance as mandated by law under the CARES Act," said Mike Fratantoni, senior vice president and chief economist at MBA.
However, Fratantoni warned that requests would likely skyrocket at an unsustainable pace in the coming weeks, putting pressure and cash flow constraints on many servicers, especially IBMs.
"To ensure that millions of Americans receive the support they need during the pandemic, it is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors," Fratantoni said.
MBA's survey data covers 22.4 million loans serviced as of April 1, representing nearly 45% of the first mortgage servicing market. MBA anticipates an increased sample size in the next few weeks as more servicers respond to requests for participation.