- Requests for forbearance, which temporarily suspends or reduces mortgage payments, surged more than 3,000% in March, according to a survey released Tuesday by the Mortgage Bankers Association.
- The report also showed loans in forbearance increased to 2.66% April 1 from 0.25% March 2. Mortgages backed by Ginnie Mae showed the largest jump to 4.25% from 0.19%.
- "It is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors," said Mike Fratantoni, chief economist at the MBA.
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Homeowners are scrambling to get answers about relief as the coronavirus pandemic wears on.
Requests for forbearance, which temporarily suspends or reduces mortgage payments, surged more than 3,000% in March, according to a survey released Tuesday by the Mortgage Bankers Association. Between March 2 and March 16, forbearance requests increased 1,270%. That momentum picked up, with requests gaining 1,896% between March 16 and March 30.
"MBA's survey highlights the immediate relief consumers are seeking as they navigate the economic hardships brought forth by the mitigation efforts to stop the spread of COVID-19," said Mike Fratantoni, MBA's chief economist, in a statement.
The uptick in requests comes as the coronavirus pandemic hits the US economy hard, sending millions of Americans into lockdown and spurring record layoffs. While the housing industry was first helped by the market meltdown, which sent mortgage rates to record lows, it's now seeing the impact of the economic fallout related to the virus.
Still, the industry is "committed to providing this much-needed forbearance as mandated by law under the CARES Act," Fratantoni said, adding that it's expected that requests will continue to skyrocket at an unsustainable pace in many weeks. This will put "insurmountable cash flow constraints" on many servicers, he said.
The huge spike in requests has pushed call center hold times to 17.5 minutes from less than two minutes in just three weeks, according to the report. In addition, abandonment rates grew to 25% from 5% in the same timeframe.
Tuesday's report also showed an increase in loans in forbearance to 2.66% April 1 from 0.25% March 2. Mortgages backed by Ginnie Mae showed the largest jump to 4.25% from 0.19%, according to the report. Independent mortgage bank services now hold 3.45% of loans in forbearance, the highest percentage, the MBA said. This reflects IMBs' focus on low-to moderate income borrowers, including Federal Housing Administration and Veterans Affairs home loan programs.
"To ensure that millions of Americans receive the support they need during the pandemic, it is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors," Fratantoni said.
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