Coronavirus-related forbearance requests accelerate most at banks

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Banks typically have a relatively low volume of forbearance requests, but the increases seen since COVID-19 started spreading are particularly pronounced among depository institutions, according to the Mortgage Bankers Association.

Between March 30 and April 5, total loans with forbearance requests increased from 2.66% to 3.74%. The percentage of total loans with forbearance rose from 3.45% to 4.17% for nonbanks and from 2.24% to 3.36% for banks. The rising numbers appear to, in part, reflect improved processing times during the period.

"With mitigation efforts seemingly in place for at least several more weeks, job losses will continue and the number of borrowers asking for forbearance will likely continue to rise at a rapid pace," Mike Fratantoni, senior vice president and chief economist at the MBA, said in a press release. "There was a decline in call center hold times and abandonment rates in the latest survey, which indicates the mortgage industry is adapting to the current environment by adding or reallocating staff and increasingly utilizing its websites to help borrowers."

Average hold times had been up exponentially — hitting 17.5 minutes (up from an average of 2 minutes, before the pandemic). But call-center data from last week show wait times were down to just over 10 minutes. Call abandonment rates that had risen well above 20% dropped to 17% last week.

The government loans Ginnie Mae securitizes had the highest forbearance share and rose the most: from above 4% to 5.89%. The share of Fannie Mae and Freddie Mac loans with forbearance rose from 1.69% to 2.44%.

Ginnie Mae over the weekend launched liquidity assistance that issuers struggling to advance principal-and-interest payments could apply for, but the MBA's calls for a liquidity vehicle to support servicing advances for the larger universe of Fannie and Freddie loans remains unanswered.

Servicing advance responsibilities could challenge independent mortgage bankers that lack a source of cash from deposits.

The association's survey includes data from more than 22 million loans that are considered a representative sample of the first-mortgage market.

Providers of government-related loans must allow up to six to 12 months of forbearance without penalty if borrowers state they have coronavirus-related hardships, but consumers can still be considered liable for paying the full amount due in the future if they put payments on hold.

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Loss mitigation Coronavirus Servicing Ginnie Mae Fannie Mae Freddie Mac GSEs Mortgage Bankers Association