The share of America’s mortgages in forbearance has now risen above 8 percent, according to the Mortgage Bankers Association’s latest survey.
The total number of loans now in forbearance increased from 7.91 percent of servicers’ portfolio volume in the prior week to 8.16 percent as of May 10. According to MBA’s estimate, 4.1 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 (11.26 percent). The number of loans in forbearance for depository servicers rose to 8.99 percent, while the number of loans in forbearance for independent mortgage bank servicers increased to 7.85 percent. The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week rose from 6.08 percent to 6.25 percent and The share of other loans like private-label securities and portfolio loans in forbearance increased relative to the prior week rose from 8.88 percent to 9.26 percent.
“The pace of forbearance requests continued to slow in the second week of May, but the share of loans in forbearance increased,” MBA Senior Vice President and Chief Economist Mike Fratantoni said in a statement. “There has been a pronounced flattening in loans put into forbearance – despite April’s uniformly negative economic data, remarkably high unemployment, and it now being past May payment due dates. However, FHA and VA borrowers are more likely to be employed in the sectors hardest hit in this crisis, which is why more than 11 percent of Ginnie Mae loans are currently in forbearance.”
According to Fratantoni, record-low mortgages rates are sustaining the refinance wave, helping homeowners lower their mortgage payments and save money during these challenging times. Furthermore, the consecutive increase in purchase applications in the last four weeks is a sign that housing demand is strengthening as more states ease restrictions on activity and people get back to work.
“Current trends suggest that if the economy continues to gradually reopen, the situation could be stabilizing,” Fratantoni said.
