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Banks have the biggest share of mortgages in forbearance

Ginnie Mae loans most likely to be in forbearance, MBA says

The overall share of home loans in forbearance rose to 7.54% in the last full week of April, from 6.99% in the prior week, with bank-based servicers holding the biggest slice.

Mortgage servicers that were banks had 8.41% of their portfolios in forbearance in the April 20 to April 26 period, up from 7.87% in the prior week, the Mortgage Bankers Association said in a report on Monday. Independent servicers had 7.13% of their portfolios in forbearance, up from 6.52%, the report said.

After a surge in pandemic-related jobless claims, the number of home loans with paused or reduced payments likely will increase, said Mike Fratantoni, MBA’s chief economist. About 30 million Americans have filed for unemployment insurance since mid-March, when states began issuing stay-at-home orders to stem the spread of the deadly virus.

“With millions more Americans filing for unemployment over the week, the level of job market distress continues to worsen,” Fratantoni said. “That is why we expect that the share of loans in forbearance will continue to grow, particularly as new mortgage payments come due in May.”

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 10.45% share in forbearance, up from 9.73% in the prior week, the MBA report said.

The share of Fannie Mae and Freddie Mac loans in forbearance rose to 5.85% from 5.46%, MBA said.

Looking at private-labelled mortgage-backed securities and portfolio loans, meaning mortgages retained by lenders, the forbearance share rose to 8.3% from 7.52%, the report said.

Prior to COVID-19 shutting down the U.S. economy, the overall forbearance rate was 0.25%, the MBA said.

After six weeks of shutdowns, the number of new forbearance inquiries has declined for three consecutive weeks, Fratantoni said.

“The pace of new requests slowed,” he said.

Forbearance requests for all types of mortgages, measured as a share of servicing portfolios, dropped to 0.63% from 1.14%, the third week of declines, he said.

The average length of forbearance-related customer calls declined for the first time in six weeks, Fratantoni said. It fell to 6.9 minutes from 7.7 minutes.

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