Distressed

Issuance of capital market instruments aimed at protecting one government-sponsored enterprise from distressed mortgage credit events staged a relatively quick rebound in 2020, a new Federal Housing Finance Agency report shows.

The rate of new forbearance requests as a share of portfolio volume also dropped to its lowest point since March, the Mortgage Bankers Association reported.

Most of the activity covered vacant and abandoned properties or commercial loans, according to Attom Data Solutions.

Altisource Portfolio Solutions’ bottom line took a larger hit in the first quarter compared to Q4 2020, causing the company to cut costs.

Rents are soaring in many U.S. cities as the economy rebounds, squeezing the budgets of tenants who also face increased risk of eviction after courts overturned a pandemic-era ban from the Center for Disease Control.

Short-term late payment rates rose again and later stage delinquencies remain at elevated levels compared to those prior to the pandemic, the Mortgage Bankers Association said.

An economic rebound, stimulus payments and COVID-19 vaccinations contributed to new delinquencies dropping to an all-time monthly low with more recovery ahead, according to Black Knight.

While government protections currently shield most borrowers and delay process timelines, a growing backlog is likely to hit some areas of the country worse than others.

Thanks to a series of government measures, the pandemic did not cause the massive wave of distressed debt flooding the market that many expected, but certain property types remain vulnerable.

Though the government-sponsored enterprises have some of the lowest forbearance rates in the market, they expect to contend with a significant population of borrowers who face steep financial setbacks after the pandemic ends.