[COVID-19] MBA’s Latest Survey Shows Significant Increase in Number of Loans in Forbearance

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Article by:

Dennis R. Baranowski, Esq.

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As individuals and businesses are increasingly feeling the economic impact of government restrictions aimed at curbing the impact of COVID-19, they are turning to their lenders in increasing numbers seeking temporary relief to help them weather the current storm.

This trend is exhibited in the most recent Forbearance and Call Volume Survey conducted by the Mortgage Bankers Association (MBA), which encompasses nearly 54% of the first-mortgage servicing sector accounting for 26.9 million loans. Between March 30 and April 5, loan forbearances for all types of loans rose sharply from 2.73% to 3.74%. The greatest increase in forbearances (1.58%) was experienced with Ginnie Mae-backed loans, which also represented  the greatest overall share in forbearance requests by investor type (5.89%). Independent mortgage bank (IMB) servicers have the highest percentage of mortgages in forbearance, at 4.17%.

Key Takeaways from the MBA’s Most Recent Forbearance and Call Volume Survey, March 30 – April 5:

  • Aggregate mortgages that were in forbearance increased relative to the preceding week, from 2.73% to 3.74%. For comparison, during the week of March 2, there were only one-quarter of loans that were in forbearance.
    • Categorized by the type of investor, Ginnie Mae-backed mortgages experienced the greatest increase in relation to the previous week—rising from 4.31% to 5.89%.
    • The percentage of Fannie Mae and Freddie Mac mortgages in forbearance rose from 1.69% to 2.44% over the course of the week.
  • Requests for forbearance as a share of servicing portfolio volume increased during the week from 1.36% to 2.43%.
  • Average loan servicer call center volume rose overall from 11.6% to 14.4%, as well as the median call length from 7.3 minutes to 7.5 minutes; whereas hold times fell from 13 minutes to 10.3 minutes. Abandonment rate percentage also decreased from 21% to 17%.
  • As of April 5, loans that were in forbearance as a percentage of servicing portfolio volume:
    • Overall: Increased from 2.73% to 3.74%
    • IMBs: Increased from 3.45% to 4.17%
    • Banks: Increased from 2.24% to 3.63%

In addition to the increase in forbearances over the first week of April, there were also increases in requests for forbearances and overall loan servicer call center volume. With the imposed lockdown appearing to remain in place for the foreseeable future, unemployment is expected to continue to rise at an unprecedented pace along with the number of debtors requesting forbearance.

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