Fewer homeowners are taking forbearance to delay their mortgage payments due to the financial and economic impact of the COVID-19 pandemic. The national forbearance rate dropped 7 basis points between Oct. 19 and Oct. 25, the Mortgage Bankers Association reports. Forbearance rates dropped for every loan type.
Mortgages in forbearance make up 5.83% of all outstanding mortgages, which is the lowest point since April 5, when the rate stood at 3.74%. Still, about 2.9 million homeowners remain in forbearance, and lenders remain concerned whether homeowners will be able to resume their payments at the end of the year or their forbearance period, when much coronavirus housing assistance runs out.
But so far, most of the data is showing that many homeowners who take forbearance are still keeping up with their mortgage payments and using it more as a safety net.
“Almost half of forbearance exits to date have been from borrowers who remained current while in forbearance, or who were reinstated by paying back past-due amounts,” says Mike Fratantoni, chief economist of the Mortgage Bankers Association. “The share of loans in forbearance has returned to levels last seen in early April, but it still remains remarkably high. Further improvement will require ongoing recovery in the job market, as well additional fiscal stimulus.”
If your clients are struggling to make their payments, the National Association of REALTORS® has developed a brochure that outlines what homeowners should ask lenders about their options and the payback requirements when considering forbearance. The brochure, called “Protect Your Investment,” is available at realtorparty.realtor.
Source: “Forbearance Rate Hits Seven-Month Low,” National Mortgage News (Nov. 2, 2020)
