Homeowners in Mortgage Forbearance Top 3.4 Million, Up 17% in a Week
Homeowners in Mortgage Forbearance Top 3.4 Million, Up 17% in a Week
(Bloomberg) -- U.S. homeowners seeking to delay mortgage payments topped 3.4 million, up 17% from a week earlier, as the coronavirus pandemic continued to ravage the economy, according to a report by Black Knight Inc.
About 6.4% of mortgage borrowers have entered forbearance plans since Congress passed legislation in March allowing them to defer payments for initial periods as long as 180 days. The rate jumped from 5.5%, or approximately 2.9 million borrowers, a week earlier, according to Black Knight, a mortgage information service based in Jacksonville, Florida.
“The forbearance numbers are climbing steadily, day by day,” Chief Executive Officer Anthony Jabbour said.
The number of Americans seeking payment relief likely will continue to soar until people are able to go back to their jobs. Under the federal relief act, borrowers are obligated to eventually make up the missed payments to avoid damage to their credit rating or possible foreclosure.
More than 26 million workers have filed unemployment claims in the past five weeks as businesses, schools and other job sites were ordered closed to arrest the pace of infections.
Servicers that collect payments on home loans sold to Fannie Mae and Freddie Mac are still required to advance money to holders of government-backed mortgage bonds for four months of the forbearance period, under an agreement reached this week.
“Even knowing that time limit, with today’s number of forbearance plans, servicers are still looking at more than $7 billion in advances over those four months,” Jabbour said in the report.
U.S. Treasury Secretary Steven Mnuchin has no plans to fund the nonbank mortgage servicers that will be required to make the advance payments, he said in an interview late Thursday with Bloomberg News.
“We’re not looking at a Fed facility for this at this time,” Mnuchin said. Large servicers probably “have the liquidity to withstand a fairly large increase in forbearances and/or delinquencies.”
About 5.6% of the 27.9 million Fannie and Freddie borrowers missed payments, compared with 8.9% of the 12.1 million borrowers of Ginnie Mae loans, which are government-backed mortgages for borrowers with lower credit scores and smaller down payments. The forbearance rate was 5.7% for the 12.9 million loans without government backing that are held on bank balance sheets, owned by investors or packaged into bonds.
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