The share of loans in forbearance has more than doubled from only a month ago
Nearly 4 million homeowners are now in forbearance plans as the COVID-19 pandemic continues to batter the economy, according to a new report by the Mortgage Bankers Association. While the pace of incoming requests is slowing down, the MBA’s chief economist said that in light of a bruising April jobs report, it “would not be surprising” if the numbers continued to rise.
The MBA’s latest Forbearance and Call Volume Survey found that the total share of loans in forbearance has increased to 7.91%, up from 7.54% the prior week and more than double the percentage of loans in forbearance just one month ago.
Mortgages backed by Ginnie Mae continued to have the largest share of loans in forbearance by investor type at 10.96%. The number of loans in forbearance for depository servicers rose to 8.75%, while the number for independent mortgage bank servicers rose 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 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%.”
Key findings of the report included:
- Total loans in forbearance hit 7.91% as of May 3. In comparison, just 0.25% of all loans were in forbearance plans during the week of March 2.
- The share of Fannie Mae and Freddie Mac loans in forbearance increased from 5.85% to 6.08%
- The share of other loans, such as private-label securities and portfolio loans, in forbearance increased from 8.3% to 8.88%
- Forbearance requests as a percent of servicing portfolio volume across all investor types dropped from 0.63% to 0.51%