The share of all U.S. mortgages in forbearance rose to 7.91% during the week ended May 3, from 7.54% in the prior week, the Mortgage Bankers Association said in a Monday report.
While the pace of requests for deferred payments is slowing, the number of forbearance approvals likely will continue to increase, said Mike Fratantoni, MBA’s chief economist.
“It will not be surprising if the forbearance numbers continue to rise,” Fratantoni said. “The dreadful April jobs report showed a decline of more than 20 million jobs, and a spike in the unemployment rate to the highest level since the Great Depression.”
The U.S. unemployment rate jumped to a record high of 14.7% in April, more than tripling from March, the Labor Department said on Friday. States were forced to close businesses to avoid overwhelming hospitals with COVID-19 patients after supply shortages stymied public health officials trying to contain the outbreak using the traditional method of testing and tracing.
Forbearance requests as a share of overall servicing volume dropped across all investor types for the fourth consecutive week: to 0.51% from 0.63%, Fratantoni said.
“Incoming forbearance requests continued to slow,” he said.
Measured by the type of investor, Ginnie Mae mortgages were most likely to be in forbearance. Those loan pools, containing mortgages primarily backed by the Federal Housing Administration and the Veterans Administration, had a 10.96% share in forbearance, up from 10.45% in the prior week, the MBA report said.
The share of Fannie Mae and Freddie Mac loans in forbearance rose to 6.08% from 5.85%, MBA said.
Looking at private-label mortgage-backed securities and portfolio loans, meaning mortgages retained by lenders, the forbearance share rose to 8.88% from 8.3%, the report said.
Prior to COVID-19 shutting down the U.S. economy, the overall forbearance rate was 0.25%, MBA said in the report.