- Number of mortgages now in forbearance rose from 4.1M to 4.2M last week
- 4.2M mortgages in forbearance represents 8.4% of outstanding home loans, according to the Mortgage Bankers Association
- Homeowners in forbearance will be able to apply for refinancing
Homeowners are still applying for mortgage forbearance, just at lower levels. This last week the number of mortgages in forbearance totaled 4.2M, up from 4.1M the week prior, according to the Mortgage Bankers Association (MBA).
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Currently, the share of loans in forbearance stands at 8.4% of all mortgages. Prior to the COVID shutdown of the economy, the overall forbearance rate was 0.25% last week. Forbearance demand dropped among all investor types for the sixth straight week (just as purchase applications rose for six consecutive weeks) to 0.28% from 0.32%.
The MBA reported that Ginnie Mae mortgages, primarily backed by the Federal Housing Authority and the Veterans Administration, increased its share of loans in forbearance from 11.3% the prior week to 11.6% this last week. Obviously, borrowers with these mortgages have been walloped by job losses due to the COVID pandemic and subsequent business lockdowns.
Mike Fratantoni, the MBA’s chief economist, said, “The decline in employment and income is hitting FHA and VA borrowers harder.”
Fannie Mae and Freddie Mac loans in forbearance rose to 6.4% of all mortgages in forbearance. The share of mortgages in forbearance retained by lenders, or private-label mortgage-backed securities and portfolio loans, rose to 9.5% from 9.3% of all loans in forbearance.
Fratantoni said, “Forbearance requests declined relative to the prior week, and while call volume (from borrowers) picked up, servicers appear well staffed for this volume, as wait times and abandonment rates dropped.”
The great news for Fannie Mae and Freddie Mac borrowers who took forbearance is that they will now be allowed to refinance their mortgages or new home purchases with the caveat that they make three straight months of payments after their forbearance ends. Additionally, GSEs also extended their timeframe for buying loans that went into first-payment forbearance from May 31 to August 31, 2020.
Thanks to HousingWire.