Key Highlights
- Overall forbearance rate of mortgages fell to 7.8%, the lowest rate in over two months, according to Mortgage Bankers Association (MBA)
- Forbearance rate of mortgages backed by Fannie Mae and Freddie Mac dropped to 3-month low of 5.64%
Things are looking up in the world of forbearance rates. The forbearance rate for mortgages backed by GSEs had its biggest decline, -43 basis points as of July 12 from the previous week, since the Mortgage Bankers Association (MBA) began tracking this data point. The rate for all mortgages regardless of backing fell -38 basis points from 8.18%.
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Jaret Seiberg, managing director of Cowen Washington Research Group, said, “This is the biggest improvement in the data since the crisis began. The trajectory is for continued improvement.
Additional good news in the world of forbearance rates – new requests from borrowers to suspend their mortgage payments remained flat at 0.13%, the same as the week prior, according to Mike Fratantoni, MBA’s chief economist. Fratantoni said, “The pace of new forbearance requests remains quite low compared to earlier in the crisis, but we are watching carefully for any increases due to either the pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance benefits at the end of this month.”
Forbearance rates for loans in Ginnie Mae securities (Veterans Administration, Federal Housing Administration and the US Department of Agriculture) also fell 30 basis points to 10.26%. The share of forbearance for private label mortgages dropped 52 basis points to 10.41%.
The biggest wild cards at this point in time for the world of forbearance rates are the rise in COVID cases and what if anything the US Senate chooses to do regarding an extension of the soon to expiring $600/week enhancement to unemployment benefits already approved by the House of Representatives two months ago.
Thanks to HousingWire.
Also read: Mortgage Bailouts Swell to 4.1M, No Lump Sum Repayments Required When Fannie & Freddie Forbearance Periods End, Podcast: New Crisis Ahead, Mortgage Markets Tighten Fearing Crash
