Another Million Homeowners Just Applied For COVID-19 Forbearance In The Past Week

Last week we reported that the number of Americans applying for the government's mortgage forbearance program had spiked to 3.74%, up from 2.73% the week before.

One week later, total home loans in pandemic-induced forbearance stand at 5.95%, an increase of 60% on the week as roughly a million more homeowners applied for help - bringing the total number of distressed borrowers under the program to roughly 3 million, according to the new Forbearance and Call Volume Survey published by the Mortgage Bankers Association.

Of those, Ginnie Mae loans grew the most week-over-week, from 5.89% to 8.26%, while the share of Fannie Mae and Freddie Mac loans grew from 2.44% to 4.64%.

For reference, total loans in forbearance were just 0.25% the first week in March, according to HousingWire.

In terms of servicing portfolio volume, independent mortgage bank servicers reached 5.69% as of April 12, compared to 4.17% one week earlier, an increase of 36%. Depository servicers ended the week with 6.57% of forbearance shares, up from 3.63% one week earlier, an increase of 80%.

In terms of call volume, the MBA survey found the percentage of servicing portfolio volume calls dropped from 14.4% to 8.8% while hold times decreased from 10.3 minutes to 4.9 minutes and abandonment rates declined from 17.0% to 9.7%. The average call length inched up slightly from 7.5 minutes to 7.6 minutes. -HousingWire

"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," said MBA's senior VP and chief economist, Mike Fratantoni. "Mortgage servicers continue to receive a very high level of forbearance requests, but volumes were down somewhat compared to the prior week."

The spike in distressed homeowners comes as existing home sales tumbled at the fastest rate in over four years.

Sales of previously owned homes, which make up most of the U.S. housing market, dropped 8.5% last month from February, the National Association of Realtors said Tuesday. The fall was deeper than expected ; economists polled by the Wall Street Journal expected a 7.5% decline. -Barrons

With no end in sight to the COVID-19 pandemic and the unprecedented economic fallout which has followed, Fratantoni thinks that forbearance requests "will likely rise again as we approach May payment due dates."

He also advocated for a federal liquidity vehicle which would assist servicers dealing with the surge in forbearances.

"Mortgage servicers are performing an essential function of the housing finance system by continuing to advance funds to investors at a time when roughly 3 million homeowners are now in forbearance," he said. "To ensure market stability during these challenging times for consumers and the entire industry, servicers need access to interim financing so that they can continue to play this critical role."

Other key findings from the BA's llatest Forbearance and Call Volume Survey (via MBA):

  • Forbearance requests as a percent of servicing portfolio volume (#) dropped relative to the prior week: from 2.43% to 1.79%.
  • Weekly servicer call center volume:
    • As a percent of servicing portfolio volume (#), calls dropped from 14.4% to 8.8%.
    • Hold times decreased from 10.3 minutes to 4.9 minutes.
    • Abandonment rates declined from 17.0% to 9.7%.
    • Average call length rose from 7.5 minutes to 7.6 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of April 12, 2020:
    • Total: 5.95% (previous week: 3.74%)
    • IMBs: 5.69% (previous week: 4.17%)
    • Banks: 6.57% (previous week: 3.63%)