Mortgage Forbearance Rate Takes Biggest Fall Yet: MBA
The pace of loans going into forbearance shrunk for the fifth week in a row, reaching a two-month low as more borrowers returned to work, according to the Mortgage Bankers Association.
The rate of mortgages going into forbearance plunged 38 basis points between July 6 and July 12, making it the steepest decline since the pandemic started, the MBA found.
About 7.8% of all outstanding loans or about 3.9 million mortgages sat in forbearance plans the first full week of July, compared to 8.18% and an estimated 4.1 million in the MBA’s report the week prior. The share of loans in forbearance at independent mortgage bank servicers fell to 7.83% from 8.1%, while depositories declined to 8.23% from 8.8% over that period.
“Almost half of borrowers remaining in forbearance are now in an extension of the original term, while the remainder are in their initial forbearance plan,” Mike Fratantoni, the MBA’s senior vice president and chief economist, said in a press release. “The pace of new forbearance requests remains quite low compared to earlier in the crisis, but we are watching carefully for any increases due to either the pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance benefits at the end of this month.”
The overall decrease was broad based, as forborne mortgage of every type fell.
The forbearance share of conforming mortgages — those purchased by Fannie Mae and Freddie Mac — dropped to 5.64% from 6.07%. Ginnie Mae loans — Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — dropped to 10.26% from 10.56%.
Private-label securities and portfolio loans — products not addressed by the coronavirus relief act — continued their high-variance trend and fell to 10.41% from 10.93%.
Posted on nationalmortgagenews.com on 7/20/2020.