The coronavirus crisis is starting to show up in the mortgage market. The outbreak is costing people their jobs, and some people are falling behind on debt payments, including mortgages.
Loans in forbearance grew to 2.66% on April 1 from just 0.25% at the start of March, according to the Mortgage Bankers Association.
In the first half of March, forbearances grew by 1,270%, and then by another 1,896% in the second half of the month, the MBA said.
Under the government’s economic relief program — the CARES act — the mortgage industry is mandated to support borrowers.
Mortgages backed by Ginnie Mae recorded the biggest increase, jumping to 4.25% in March. Since the start of April, independent mortgage bank servicers have the largest share of loans in forbearance.
“MBA’s survey highlights the immediate relief consumers are seeking as they navigate the economic hardships brought forth by the mitigation efforts to stop the spread of COVID-19,” said Mike Fratantoni, senior vice president and chief economist of MBA.
Over the next weeks, forbearance requests are expected to “skyrocket at an unsustainable pace,” said Fratantoni.
The government now has to provide a lending facility that supports mortgage servicers, which still have to pay the servicing fees during the forbearances, he added.