Advertiser Disclosure

advertising disclaimer
Skip to main content
mortgage loan papers with keys

Mortgage Forbearances Continue Climbing, Albeit a Bit Slower


[Updated: Dec 11, 2020] May 21, 2020 by Marc Rapport
Get our 43-Page Guide to Real Estate Investing Today!

Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.

*By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Before the novel coronavirus pandemic, the word "forbearance" was a perhaps somewhat obscure term for a rarely used type of relief for financially troubled homeowners, especially in an economy that had been going strong for years.

Now, not so much. The Mortgage Bankers Association (MBA), in its weekly Forbearance and Call Volume Survey released Monday, May 18, says an estimated 4.1 million homeowners are now enrolled in such plans.

That's an estimated 8.16% of total servicers' volume in such deferred payment programs, up 3,164% from the 0.25% of mortgage volume in forbearance in early March.

Refinancing and application rise feed optimism

Last week's number was 7.91%, the MBA said, and the pace of requests is rising more slowly than when the pandemic first took hold of the U.S. economy, sending joblessness soaring and millions of household incomes plummeting.

That might be because so many loans are already in delayed payment plans, and because so many homeowners have also taken advantage of low interest rates to refinance their mortgages and save money on monthly payments.

MBA chief economist Mike Fratantoni also expressed this optimistic note: "Furthermore, the consecutive increase in purchase applications in the last four weeks is a sign that housing demand is strengthening as more states ease restrictions on activity and people get back to work."

Ginnie Mae notes hit the hardest

The highest segment of loans in forbearance by investment type belonged to Ginnie Mae at 11.26%. Fratantoni pinned that on the number of FHA and VA borrowers who are likely in employment sectors hardest hit by the economic crisis.

Loans in forbearance at depository servicers such as banks and credit unions were at 8.99% in the latest survey and at 7.85% for independent mortgage bank servicers. Fannie Mae and Freddie Mac loans recorded a forbearance rate of 6.25% in this week's survey.

"We will continue to closely monitor the forbearance request and call volume data for any sign of an uptick," Fratantoni said, "but current trends suggest that if the economy continues to gradually reopen, the situation could be stabilizing."

The "Unfair Advantages" of Real Estate Just Got a Whole Lot Better

Investing in real estate has always been one of the most effective paths to financial independence. That's because it offers incredible returns and even more incredible tax breaks.

These benefits weren't enough for Uncle Sam, though, as a new tax loophole now allows those prudent investors who act today to lock in decades of tax-free returns. We've put together a comprehensive tax guide that details how you can benefit from this once-in-a-generation investment opportunity. Simply click here to get your free copy.

Bank CD rates has a disclosure policy.