Distressed job market pushes mortgage forbearance requests higher

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The total coronavirus-related mortgages in forbearance grew by 55 basis points between April 20 and 26, in lockstep with rising but slowed unemployment claims, according to the Mortgage Bankers Association.

An estimated 3.8 million mortgage loans sit in forbearance plans as of April 26. About 7.54% of all outstanding mortgages went into forbearance, compared to 6.99% from the week before.

The share of loans in forbearance at independent mortgage bank servicers saw a greater increase, growing to 7.13% from 6.52% over that period. At depositories, that share increased to 8.41% from 7.87%.

"With millions more Americans filing for unemployment over the week, the level of job market distress continues to worsen," Mike Fratantoni, the MBA's senior vice president and chief economist, said in a press release. "That is why we expect that the share of loans in forbearance will continue to grow, particularly as new mortgage payments come due in May."

Forbearance requests as a percentage of servicing portfolio volume declined 51 basis points to 0.63% from 1.14% for the week ended April 19. But call center volume as a percentage of portfolio volume decreased to 7.2% from 10% the previous week.

Ginnie Mae mortgages — Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — maintained its hold on the highest percentage of loans in forbearance by investor type, going up to 10.45% from 9.73%.

The share of conforming mortgages, those purchased by Fannie Mae and Freddie Mac, in forbearance rose to 5.85% from 5.46%. The share of forbearance of private-label securities and portfolio loans — products which were not addressed by the coronavirus relief act — jumped to 8.3% from 7.52% one week prior.

The MBA's sample for this week's survey includes a total of 56 servicers broken down by 31 independent mortgage bankers, 23 depositories, plus two subservicers. By unit count, the respondents represented nearly 77% of the outstanding first-lien mortgages.

The MBA remains hopeful the housing industry can be the rising tide that lifts all ships within the economy.

"As states across the country begin to reopen their economies, a silver lining we are seeing is indications of increased activity in the housing market, including more purchase applications in some markets," Fratantoni said. "We are hopeful that the housing market can eventually contribute to a broader rebound in economic activity, which would then begin to reverse the unprecedented job losses experienced during this crisis."

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Loss mitigation Distressed Coronavirus Mortgage Bankers Association Fannie Mae Freddie Mac Ginnie Mae MSR