Fewer Americans are calling their mortgage servicers to ask for relief from mortgage payments, but the housing industry isn’t out of the woods yet.
More than 4.1 million homeowners are in forbearance plans now, according to the latest data from the Mortgage Bankers Association.
While mortgage servicers are still facing stress because of the record deluge of requests for payment relief, signs suggest that homeowners’ prospects have improved as parts of the country have begun to emerge from coronavirus stay-at-home orders.
Overall, 8.16% of all mortgages were in forbearance as of May 10, meaning borrowers can either skip or make reduced payments, the trade group said. That was up from 7.91% as of May 3, which is the smallest increase since March. Forbearance requests dropped from 0.52% of the total mortgage volume to 0.32%.
“There has been a pronounced flattening in loans put into forbearance — despite April’s uniformly negative economic data, remarkably high unemployment, and it now being past May payment due dates,” Mike Fratantoni, chief economist for the Mortgage Bankers Association, said in the report.
The potential exception to this trend is the segment of the market for loans backed by Ginnie Mae, including Federal Housing Administration (FHA) and Veterans Affairs (VA) loans. More than 11% of Ginnie Mae loans are in forbearance because of the coronavirus outbreak. These loans tend to go to borrowers who are first-time homeowners with weaker credit — people who could be more exposed to the economic downturn the pandemic has caused.
While the pace of homeowners requesting forbearance has slowed, the end of the mortgage industry’s troubles isn’t necessarily in sight. A recent report from U.K.-based economic forecasting firm Oxford Economics estimates that 15% of homeowners will fall behind on their monthly mortgage payments.
The outlook for homeowners will likely depend on their ability to bounce back, particularly for those who have lost their jobs. The good news for mortgage lenders is that job losses caused by the coronavirus have largely been concentrated in the service sector, according to a report from First American Financial FAF, +0.81%, a title insurance company. Because these jobs are lower skilled and lower paid, it’s less likely that the newly unemployed already owned homes.
This article was originally published on finance.yahoo.com/news/.
- Damon Nam is Disrupting the Blockchain Industry with Emerging FinTech Company, Coin. - November 6, 2020
- Meet Entrepreneur Quinelle Holder, THe Founder of Medium Creative Agency - September 30, 2020
- Thomas Auringer: Building Buildings and Building Cultures - September 23, 2020