A pair of reports show that the pace of forbearance requests continued to rise in the past week, albeit at slower rates.
However, the impact of those continued additional requests could cost services at least $8 billion in advances before they are able to gain regulatory relief.
The Mortgage Bankers Association’s new Forbearance and Call Volume Survey found that the total number of loans in forbearance rose to 7.91 percent of all loans in portfolio, up from 7.54 percent a week earlier. That’s a total of nearly 4 million forbearance requests, up from about 3.8 million the week before.
“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,” MBA Senior Vice President and Chief Economist Mike Fratantoni said in a release. “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.”
Meanwhile, Black Knight Inc. reported findings from its McDash data that as of May 7, 7.7 percent of all mortgages are in forbearance, totaling 4.078 million loans. In total, Black Knight reported that the loans in forbearance totaled $890 billion in unpaid principal.
In MBA’s survey, which featured responses from more than three-quarters of the first-lien market in the country, Ginnie Mae was found to have the largest overall share of loans in forbearance at 10.96 percent, followed by Fannie Mae and Freddie Mac at 6.08 percent. Banks’ share of forbearance loans rose to 8.75 percent, while independent mortgage bank servicers’ share rose to 7.54 percent.
“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,” Fratantoni said. “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.”
Black Knight’s report found forbearance loans backed by Fannie and Freddie totaled 6.4 percent of their portfolio while making up 11 percent of all loans backed by FHA and VA.
“At today’s level, mortgage servicers need to advance a combined $4.5 billion a month to holders of government-backed mortgage securities on COVID-19-related forbearances,” Black Knight stated. “Another $2.1 billion in lost funds will be faced each month by those with portfolio-held or privately securitized mortgages (some 7.2% of these loans are in forbearance as well).”
Given the number of loans in forbearance, servicers of loans backed by Fannie and Freddie face $8 billion in advances over the four-month period before Fannie and Freddie will cap those advances. However, there is no such cap on the additional $800 million in monthly taxes and insurance advances.