By Jim Perskie
The number of mortgage loans in forbearance in the United States began declining for the first time since the CARES Act was passed in response to economic hardships caused by the COVID-19 pandemic shutdown across the country.
The Mortgage Bankers Association’s weekly survey found that 8.48 percent of mortgages were in forbearance as of June 14 – down from 8.55 percent the week before. That works out to an estimated 4.2 million homeowners in forbearance plans, down from 4.3 million the week before.
“Fewer homeowners in forbearance underscores the continued improvements in the job market and provides another sign of the fundamental health of the housing market, which has rebounded considerably over the past several weeks,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
The CARES Act includes a moratorium on foreclosures and the right to forbearance on federally backed mortgages. Forbearance allows borrowers to put off payments for at least 180 days if they suffer economic hardship during the pandemic.
MBA’s survey found:
- The share of Fannie Mae and Freddie Mac loans in forbearance dropped for a second week in a row to 6.31 percent, down from 6.38 percent.
- Ginnie Mae loans in forbearance held steady for a third straight week at 11.83 percent.
- Bank-managed mortgages in forbearance dropped to 9.15 percent from 9.24 percent.
- Independent mortgage bank mortgages in forbearance dropped from 8.43 percent to 8.40 percent.
In early March, the share of mortgages in forbearance was 0.25 percent.
“The big unknown with respect to this positive development is the extent to which it relies upon policy measures put in place to help families through this crisis, particularly the stimulus payments and enhanced unemployment insurance benefits that were key parts of the CARES Act,” Fratantoni said. “We expect to see further improvements in the weeks ahead given the drop in forbearance requests this week.”