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The coronavirus-related forborne rate of mortgages plateaued between Aug. 17 and Aug. 23, says the Mortgage Bankers Association.
On the heels of a 10-week long fall, the rate finally held at 7.2% for the above mentioned week. In figures, this is equivalent to 3.6 million mortgages. Over the same period, the forborne rate of mortgages fell to 7.41% from 7.43% for the independent mortgage servicers.
Mike Fratantoni, Senior VP and Chief Economist for MBA, issued in a press release that “The share of loans in forbearance was unchanged, as the decline in the share of GSE loans was offset by increases for Ginnie Mae, and portfolio and PLS loans. The pace of new forbearance requests has been relatively flat across investor types, but for those with GSE loans, the rate of exits from forbearance regularly exceeds the rate of new requests.”
The forborne loan numbers for conforming mortgages were down to 4.88% from 4.93% for ‘Fannie’ and ‘Freddie’ while it rose from 9.54% to 9.58% for Ginnie Mae (FHA, VA, and USDA Rural Development).
It is nice to have the drop arrested but this is not to say that there is no uncertainty lined up ahead. With the presidential elections coming up and the foreclosure moratorium extended to 2020-end, it is hard to say how the entire thing pans out in the end.
Sagent’s CEO, Dan Sogorka said as much, “Giving forbearance, writing people checks and putting in foreclosure moratoriums are relatively easy things to do. Managing how it plays out on the backend is going to be much more nuanced.”
Sogorka further believes that unemployment, the broader economic picture, and the political bearing on the mortgage industry may well determine a lot of things. The government, he thinks, has been spending money like a king and introducing pressure-reducing policies for the people but if we are not out of the Covid-19 threat yet, and there may still be relapses lined up, the backlog of people who should have been foreclosed by now but are not will only increase.