Millions of homeowners are now in forbearance, essentially pausing their monthly mortgage payments … [+]
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More than 3.4 million American mortgage borrowers are now in forbearance—essentially hitting the pause button on their monthly payments for the foreseeable future.
According to the latest data from financial data firm Black Knight, that’s up from 2.9 million one week ago. In total, 6.4% of all U.S. mortgage loans are now in forbearance.
FHA and VA loans have seen the biggest surge in forbearance volume. Currently, almost 9% of these loans are in forbearance, while just 5.6% of mortgages backed by Fannie Mae and Freddie Mac are.
Data from the Mortgage Bankers Association also shows that bank mortgage servicers have higher shares of loans in forbearance than independent ones (8.26% vs, 6.57%)
Here’s how Mike Fratantoni, MBA’s senior vice president and chief economist, summed up the situation: “With over 22 million Americans filing for unemployment over the past month, homeowners are contacting their mortgage servicers seeking relief, leading to a sharp increase in the share of loans in forbearance across all loan types.”
The good news? Forbearance requests actually declined over the week, decreasing from 2.43% to 1.79% according to MBA. Still, that doesn’t mean the wave has stopped—especially if social distancing orders remain in place.
“Given that lockdowns and associated job losses will continue in the coming weeks, forbearance inquiries will likely rise again as we approach May payment due dates,” Fratantoni says. “Borrowers facing COVID-19-related hardships should contact their servicer to review all of their options.”
Fortunately, contacting servicers appears to be getting easier and easier for customers.
Call hold times have decreased to a mere 5 minutes (they were 17.5 minutes just a few weeks ago), and the share of customers abandoning their calls fell below 10% last week. During the week of April 1, the call abandonment rate was a whopping 25%.