The total number of loans in forbearance fell by 38 basis points to 7.8% as of July 12, 2020, with the Mortgage Bankers Association (MBA) [1] estimating 3.9 million homeowners are still in forbearance plans.
The MBA’s prior report found 8.18% of loans were in forbearance. Its latest survey covers the period from July 6 through July 12 and represents 75% of the mortgage market or 37.3 million loans.
Loans guaranteed by the GSEs that are in forbearance fell for the sixth consecutive week to 5.64%, which is a 43-basis-point drop. Ginnie Mae loans in forbearance fell 30 basis points to 10.26%.
"The share of loans in forbearance dropped to its lowest level in over two months, driven by an increase in the pace of exits as more homeowners have been able to get back to work," said Mike Fratantoni, MBA's SVP and Chief Economist. "The decline in the forbearance share was broad-based, with decreases for GSE, Ginnie Mae, and portfolio/PLS loans."
Fratantoni added that nearly half of the borrowers remaining in forbearance plans are now in an extension of the original term.
“The pace of new forbearance requests remains quite low compared to earlier in the crisis, but we are watching carefully for any increases due to either the pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance benefits at the end of this month,” he said.
The Federal Housing Finance Agency [2] (FHFA) announced earlier this month that Fannie Mae and Freddie Mac will extend several loan origination flexibilities until August 31. These flexibilities were set to expire on July 31, 2020.
Extended flexibilities include:
- Alternative appraisals on purchase and rate term refinance loans;
- Alternative methods for documenting income and verifying employment before loan closing; and
- Expanding the use of power of attorney and remote online notarizations to assist with loan closings.
In June, the FHFA announced the GSEs would extend their single-family moratorium [3] on foreclosures and evictions until at least August 31. The moratorium applies to all GSE-backed mortgages and was set to expire on June 30.
"To protect borrowers and renters during the pandemic we are extending the Enterprises' foreclosure and eviction moratorium. During this national health emergency no one should worry about losing their home," said Director Dr. Mark A. Calabria.