The share of borrowers seeking payment relief on loans skyrocketed as COVID-19 concerns mounted, a recent survey by the Mortgage Bankers Association shows.
Between March 2 and April 1, the amount of loans with forbearance requests increased to 2.66% from 0.25%. This marks a more than tenfold growth in requests every two weeks, with a 1,270% increase between March 2 and March 16 and a 1,896% jump between March 16 and March 30.
Hold times in servicer call centers also grew dramatically — from 2 minutes to 17.5 minutes — over the course of a few weeks in March. Abandonment rates increased to 25% from 5%, the report found.
The largest surge in forbearance requests was for the government loans packaged into the securitizations that Ginnie Mae insures, rising from 0.19% to 4.25% over the period analyzed.
Ginnie Mae has promised to provide some support for mortgage servicers that need to advance principal and interest payments from loans to bondholders while borrowers are not paying, but it's unclear how extensive that government intervention will be, and the MBA has sought broader public aid for the industry.
The company's bank tellers, call-center workers and support staff are part of the roughly 70% of American workers who don’t have the ability to work from home.
Sales of previously owned homes surged in February to the fastest pace in 13 years, highlighting a flurry of activity in the housing market before the economic repercussions of the coronavirus.
More than 245,000 people were registered for the June exam as part of the three-level program to earn a credential from the most challenging test in finance.
"It is expected that requests will continue to skyrocket at an unsustainable pace in the coming weeks, putting insurmountable cash-flow constraints on many servicers," said Mike Fratantoni, senior vice president and chief economist at the MBA.
The constraints will be particularly hard on independent mortgage bankers that lack a source of cash from deposits. As of April 1, the percentage of loans in forbearance in IMBs' servicing portfolios was 3.45%. That request rate is 2.24% for banks and 2.73% for all loans.
The association's survey included data from more than 22 million loans in the first-mortgage market.
Providers of government-related loans must provide up to six to 12 months of forbearance without penalty if borrowers state they have coronavirus-related hardships, but consumers can still be considered liable for paying the full amount due in the future if they put payments on hold.
