The U.S. economy lost 20.5 million jobs in April, and the unemployment rate soared to 14.7%.
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A new survey by the Mortgage Bankers Association reveals a sharp uptick in the number of mortgage loans in forbearance. The record number of Americans filing for unemployment benefits is fueling the surge. In April, the unemployment rate soared to 14.7%, the worst since the Great Depression.
The total number of home loans now in forbearance increased from 7.54% of servicers’ portfolio volume in the prior week to 7.91% as of May 3 as homeowners continue to seek relief from mortgage payments amid the coronavirus crisis. According to MBA’s estimate, approximately 4 million homeowners are in forbearance plans.
Mortgages backed by Ginnie Mae once again showed the largest overall share of loans in forbearance by investor type at 10.96%. The number of loans in forbearance for depository servicers such as commercial banks and credit unions rose to 8.75%, while the number of loans in forbearance for independent mortgage bank servicers increased to 7.54%.
“With the calendar turning to May, the share of loans in forbearance increased, but the pace of the increase and incoming forbearance requests continued to slow,” said Mike Fratantoni, MBA’s chief economist. “The dreadful April jobs report showed a decline of more than 20 million jobs, and a spike in the unemployment rate to the highest level since the Great Depression. It will not be surprising if the forbearance numbers continue to rise. As we anticipated, FHA and VA borrowers have been most impacted by the job losses thus far, with the share of Ginnie Mae loans in forbearance at almost 11 percent.”
Added Fratantoni, “Although the pace of forbearance requests slowed this week, call volume picked up, which could be a sign that more borrowers are calling in to check their options now that May due dates have arrived.”
MBA’s latest forbearance and call volume survey covers the period from April 27 through May 3, and represents nearly 77% of the first-mortgage servicing market (38.3 million loans).