News

Loans in forbearance grow to 3.8 million, but requests are slowing

According to the latest Forbearance and Call Volume Survey from the Mortgage Bankers Association (MBA), forbearance numbers increased again last week in aggregate, but the rate of their growth is slowing.

MBA estimates about 7.54% of the loans in servicers’ portfolios were in forbearance as of April 26, up from 6.99% a week earlier. A total of 3.8 million homeowners are now in forbearance plans.

Among investor types, Ginnie Mae-backed mortgages had the highest rate of forbearance at 10.45%, up from 9.73% in the preceding week. Mortgages in forbearance for depository servicers grew from 7.87% to 8.41%, while independent mortgage bank loans in forbearance rose from 6.52% to 7.13%.

It’s the third straight week of declining forbearance growth, said Mike Fratantoni, MBA’s senior vice president and chief economist. He predicted, however, that requests will continue to mount in the near term.

Articles in your inbox before your coffee is done.

Get Daily News

“The share of loans in forbearance increased once again in the last full week of April, but the pace of new requests slowed,” Fratantoni said. “With millions more Americans filing for unemployment over the week, the level of job-market distress continues to worsen. 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.”

Meanwhile, signs of life around the country’s residential real estate markets made Fratantoni cautiously optimistic.

“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,” he 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.”

The MBA’s estimates are derived from a survey that covered the week of April 20-26. Survey data represents nearly 77% of the first-lien mortgage servicing market, a slice that includes about 38.4 million loans.

Author

More Headlines