DALLAS–The number of mortgages in coronavirus-related forbearance deserves attention, according to one analyst.
Brian Turner, president and chief economist with Meridian Economics, cited data from the Mortgage Bankers Association that shows after a slight decrease one week earlier, the number of mortgages in coronavirus-related forbearance jumped 1% during the first week of December. Home loans in forbearance plans represent 5.5% of all outstanding mortgages - or 2.7 million borrowers, said Turner.
“There has been little movement in the forbearance rate over the past five weeks with the average vacillating around six basis points,” wrote Turner. “Apparently additional restrictions on business and rising COVID cases are causing a renewed increase in layoff and other signs of slowing economic activity. These troubling trends will likely result in an increase in more homeowners seeking relief. Already, Ginnie Mae borrowers under forbearance have reached the highest level since June, jumping to 7.8% of loans.”
Turner further noted an 18.8% share of all forborne mortgages sit in the initial forbearance stage, while 78.5% shifted to extended plans. The remaining 2.7% re-entered forbearance after exiting it previously. The MBA sample included a total of 49 services with 26 independent mortgage bankers and 21 depositories. It also included two sub-servicers. Respondents represented about 74% - about 37.2 million of outstanding first-lien mortgages, Turner said.
Important Deadlines
“This week, the Federal Housing Administration pushed the deadline for initial mortgage forbearance requests by two months as Congress extended broader COVID-related relief through February,” Turner stated. “This includes foreclosure moratoriums, re-verification of employment guidance, an exterior-only appraisal inspection option and provisions for the verification of self-employment, rental income and 203(k) escrow accounts.”
Turner said the deadlines for CARES Act forbearance requests are important because not all programs are as consumer-friendly as what is offered through the legislation. He reminded CARES Act forbearance did not apply to private loans and COVID-related hardship must be provided upon request for 180 days, extendable by another 180 days, and the borrower must make up the payments later.
Recent congressional action has extended those request deadlines through February.