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Share of Mortgages in ‘Financial Hardship’ Improves in June

The share of accounts in “financial hardship” has begun to level off for products such as auto loans, credit cards, mortgages, and personal loans during June 2020, according to TransUnion’s Consumer Credit Snapshot.

TransUnion stated that some of the improvement was due to accounts coming out of financial hardship status in June.

The percentage of mortgages in financial hardship fell to 6.79% in June from May’s 7.48%. Five percent of mortgages were in financial hardship in April just 0.48% of mortgages were in financial hardship in March, pre-pandemic.

“In the early months of the pandemic, unemployment benefits and relief from the CARES Act gave consumers a bit of a cushion, leaving the consumer fairly well-positioned from a cash flow perspective,” said Matt Komos, VP of Research and Consulting, TransUnion. “Lenders have been working with consumers during this time of uncertainty by extending financial hardship offerings that help them understand and manage their financial situation. These accommodations have been working as intended and have helped thwart a material breakdown in delinquency performance in the near-term.”

The Mortgage Bankers Association (MBA) reported this week that the number of loans in forbearance fell to 7.8% as of July 12, 2020. Additionally, the MBA estimates 3.9 million homeowners remain 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."

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
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