May 16, 2021

MP Now News

Mortgage News

Forbearance Rate Drops For Seventh Week In A Row

The mortgage share of indulgence continues to pull back from last summer’s highs, but around 2.3 million homeowners are still taking a break from their monthly mortgage payments, according to the latest figures from the Mortgage Bankers Association (MBA).

The MBA’s weekly indulgence and call volume survey found the indulgence rate dropped to 4.5 percent for the seventh consecutive time as of April 11, 2021. This is 18 times higher than the pre-pandemic 0.25 percent rate, but has improved significantly from a high of 8.55 percent in June.

Forbearance rates were lowest for mortgages covered by Fannie Mae and Freddie Mac (2.44 percent) and highest for personal loans (8.34 percent). The forbearance rate for Ginnie Mae securitized FHA, VA, and USDA mortgages was 6.16 percent.

“Economic data for housing and consumer spending in March shows a strong real estate market and an accelerating pace of economic activity,” said Mike Fratantoni, chief economist at the MBA, in one statement. “Combined with the support from homeowners and the stimulus payments many households are receiving, we expect the forbearance numbers to continue to decline in the months ahead as more people find employment.”

About a third of borrowers who have been granted extended indulgence have now been more than 12 months without loan payments, Fratantoni said. Borrowers on mortgages backed by Fannie Mae, Freddie Mac, FHA, VA, and USDA can have COVID forbearance for up to 18 months.

There are concerns that some borrowers are at risk of losing their homes if they cannot resume payments. The Consumer Financial Protection Bureau has proposed a moratorium on foreclosures by December 31, 2021 – a rule that would also apply to personal loan service providers.

Most homeowners who have been granted COVID Forbearance are not expected to make up for their missed payments in one go. Depending on the type of loan, they may be able to complete a repayment plan, apply for a loan modification, or defer repayment until they refinance or sell their home. Homeowners and renters can Find out more about their options on the website of the Consumer Financial Protection Bureau.

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