Here’s what mortgage forbearance looked like in 2020
As the coronavirus began to hit the United States in March, many states issued business closure orders, putting up to 40 million people out of work in May.
On March 27, Congress adopted the CARES Law provide economic relief to those affected by the closures, by increasing unemployment benefits and offering mortgage forbearance to homeowners whose mortgages are guaranteed or insured by the federal government, including Freddie mac, Fannie Mae, Virginia and FHA.
Under the CARES Act, homeowners can apply for forbearance from their mortgage agent and withhold payments for up to 12 months. About 4.3 million homeowners have requested forbearance since the start of the program.
Today, 2.7 million homeowners live in abstention – with more than 78% of them in an extension plan, according to the Mortgage Bankers Association Forbearance and call volume survey. Even now, with a vaccine being distributed and a second relaunch check underway, owners continue to take advantage of forbearance options.
In fact, the Federal Housing Administration (FHA) announced last week that borrowers have even more time to request deferred payments after extending the deadline for initial forbearance applications for FHA-guaranteed mortgages to February 28, 2021. It is now possible, with a six-month extension, for some FHA borrowers to be forborne until February 2022.
Despite what many think, Gen Z and Millennials want to own and are excited about the prospect. As an industry, if we are willing to take on this advisory role, we can be more successful in helping potential buyers become homeowners.
Presented by: Fannie Mae
Here’s a month-by-month look at how mortgage forbearance unveiled this year.
March: President Donald Trump declared a national emergency on March 13, and the housing industry was instantly hit. Red tuna, for exemple, announced in april it would reduce its number of employees by around 7%, and companies outside the industry have also started to lay off and lay off employees.
Especially, on March 23, Fed Chairman Powell ad the central bank would make “unlimited” MBS purchases, reducing the average 30-year fixed mortgage to 3.45%.
April: The overall share of forbearance mortgages Pink to 7.54% in the last full week of April, with banking services taking the largest share. At this point, 30 million Americans had applied for unemployment insurance since mid-March.
At the end of April, the average American rate of a 30-year fixed-rate home loan fell to an all-time low by 3.23%.
May: With millions of unemployed, the housing market has faced its biggest challenge in over a decade. As of May 31, total forbearance loans stood at 8.53% – with nearly 4.3 million homeowners in forbearance plans.
June: Stronger unemployment benefits kept abstention rates lower than many expected; Instead of 20% or 30%, the abstention rate was 8.6% of all active mortgages during the last week of June. The number of homeowners with outstanding loans has fallen to 4.2 million.
July: the Federal Reserve Bank of Atlanta warned in July that the danger of mortgage abstentions turning into seizures was increasing, as the number of cases of people infected with COVID-19 hit a record high. While those numbers seem tame now, the country reported a then-record 54,500 new viral infections before the July 4 holiday.
Adding to consumer stress, July 30 marked the end date of the federal $ 600-per-week improvement in state unemployment benefits aimed at fully replacing the wages of people who have lost their jobs amid the pandemic.
“The threat of forbearance going to lockdown has regained power as the number of COVID-19 infections increases and the CARES Law unemployment insurance benefits will expire at the end of July, ”Atlanta federal economists mentionned.
As of July 26, the total number of loans in forbearance had fallen to 7.67% and 3.8 million homeowners were on the forbearance plan.
August: The forbearance rate on mortgages guaranteed by Fannie Mae and Freddie Mac fell by 9,000 in August, offsetting gains from other loan programs and leaving the overall rate at 4.7%.
One month of August report accounts in financial difficulty by TransUnion While 53% of those surveyed said they make normal payments on their mortgages, 14% said they were unsure how they were going to pay their next bill.
As of August 30, the total number of forbeared loans tear down at 7.16%, and 3.6 million owners were on an abstention plan.
September: The number of mortgages in active forbearance increased by 21,000 in the last week of September, according to a report by Black Knight. Almost 7% of all mortgages in the country were in active patience, representing 3.6 million homeowners and $ 751 billion in outstanding principal.
October: the Department of Housing and Urban Development in October ad that the FHA extend the date on which consumers can apply for mortgage forbearance until December 31, 2020.
November: As of November 22, 2.8 million homeowners were on a forbearance regime, which represents 5.54% of the total number of mortgages.
December: On the way to the last week of the year, Estimates of the Dark Knight 2.8 million homeowners are subject to some form of forbearance, or 5.3% of all mortgages, which is $ 565 billion in principle overdue.
Mortgage rates hit the lowest number in Freddie Mac survey history in December, falling to 2.66%.
On December 2, the FHFA extended its moratorium on foreclosures for borrowers with back-to-back mortgages Fannie Mae and Freddie mac – although for a grace period of one month until January 31. The FHFA has not announced whether it will continue to buy loans with forbearance beyond the current expiration date of December 31, 2020.
On December 21, a second stimulus law was signed that will provide $ 600 to adults earning less than $ 75,000.
More information can be found on HousingWire’s Forbearance FAQ page.