About 4.2 million mortgages are now in forbearance, representing 8.4% of outstanding home loans, the Mortgage Bankers Association said on Tuesday.
The numbers increased from 4.1 million mortgages last week and an 8.2% share, MBA said.
Measured by the type of investor, Ginnie Mae mortgages were most likely to be in forbearance, the report said. Ginnie Mae loan pools, containing mortgages primarily backed by the Federal Housing Administration and the Veterans Administration, had an 11.6% share of loans in forbearance, up from 11.3% in the prior week, the MBA report said.
Those borrowers, who tend to have lower credit scores and slimmer savings, are being harder-hit by a spike in job losses, said Mike Fratantoni, MBA’s chief economist. The U.S. unemployment rate spiked to a record high of 14.7% in April, more than tripling from March, after states trying to stem the spread of the COVID-19 pandemic shuttered businesses.
“The decline in employment and income is hitting FHA and VA borrowers harder,” Fratantoni said.
The share of Fannie Mae and Freddie Mac loans in forbearance rose to 6.4% from 6.3%, MBA said.
Looking at private-label mortgage-backed securities and portfolio loans, meaning mortgages retained by lenders, the forbearance share rose to 9.5% from 9.3%, 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.
The average length of time representatives spent on calls talking to borrowers interested in a forbearance increased to 7 minutes from 6.7 minutes, the report said.
The average wait time for callers fell to 1.6 minutes from 2 minutes, and the abandonment rate, meaning the share of callers who hung up before speaking to someone, fell to 4.6% from 5.3%, MBA said.
Forbearance requests as a percent of servicing portfolio volume dropped across all investor types for the sixth consecutive week relative to the prior week: to 0.28% from 0.32%.
“Forbearance requests declined relative to the prior week, and while call volume picked up, servicers appear well staffed for this volume, as wait times and abandonment rates dropped,” Fratantoni said.