New Mortgage Forbearances Decrease for Eight Week in a Row
Didier Malagies • August 11, 2020
New Home Forbearance Decrease for Eighth Week in a Row
New Mortgage Forbearances Decrease for Eighth Week in a Row
National Mortgage News
Written by: Paul Centopani
The pace of mortgages going into coronavirus-related forbearance declined for the eighth week in a row, plummeting 23 basis points between July 27 and August 2, according to the Mortgage Bankers Association.
An estimated 7.44% of all outstanding loans — or approximately 3.7 million — sat in forbearance plans compared to 7.67% and about 3.8 million the week earlier. The share of forborne loans at independent mortgage bank servicers declined to 7.71% from 7.81%, while depositories dropped to 7.63% from 7.95% over the same period. It marks the first time all three segments fell below 8% since the week ending April 19
“New forbearance requests increased, but are still well below the level of exits,” Mike Fratantoni, the MBA’s senior vice president and chief economist, said in a press release. “Some of the decline in the share of Ginnie Mae loans in forbearance was due to additional buyouts of delinquent loans from Ginnie Mae pools, which result in these FHA and VA loans being reported in the portfolio category.”
The forbearance share of conforming mortgages — those purchased by Fannie Mae and Freddie Mac — fell to 5.19% from 5.41%. Ginnie Mae loans — Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — fell 22 basis points to 10.06% from 10.28%.
Private-label securities and portfolio loans — products not addressed by the coronavirus relief act — continued going up and down, this week dropping to 10.12% from 10.37%.
Amid some positive indicators, Fratantoni warned that current economic conditions may hinder borrowers who are trying to get out of forbearance.
“The job market data in July came in better than expected,” Fratantoni said. “However, the unemployment rate is still quite high, and the elevated level of layoffs and slowing pace of hiring will make it more difficult for borrowers to get back on track – particularly if there is not an extension of relief.”
Forbearance requests as a percentage of servicing portfolio volume rose to 0.12% from 0.1%, while call center volume as a percentage of portfolio volume also increased to 7.8% from 6.7%.
The MBA’s sample for this week’s survey includes a total of 52 servicers including 27 independent mortgage bankers and 23 depositories. The sample also included two subservicers. By unit count, the respondents represented about 75%, or 37.3 million, of outstanding first-lien mortgages.
Worries of all these forbearances becoming a tsunami of foreclosures ran rampant in the industry but have calmed in recent weeks. The housing market showed off its relative strength compared to the overall economy through the pandemic as a growing faction of borrowers gained more equity in their homes.
Foreclosures are usually a two-step process, happening at the confluence of “adverse economic shock” and low equity levels, leading to a “dual trigger hypothesis,” according to First American deputy chief economist Odeta Kushi.
“Alone, economic hardship and a lack of equity are each necessary, but not sufficient to trigger a foreclosure,” Kushi said. “It is only when both conditions exist that a foreclosure becomes a likely outcome.”
Start Your Loan
with DDA todayYour local Mortgage Broker
Mortgage Broker Largo See our Reviews
Looking for more details? Listen to our extended podcast!
Check out our other helpful videos to learn more about credit and residential mortgages.
Cost of Retirement comfort soars, leaving most far short
1. HOA / Condo Association Loans (Most Common) These are commercial loans made directly to the association, not individual unit owners. Typical uses Roof replacement Structural repairs Painting, paving, elevators, plumbing Insurance-driven or reserve shortfalls Key features No lien on individual units Repaid through monthly assessments Terms: 5–20 years Fixed or adjustable rates Can be structured as: Fully amortizing loan Interest-only period upfront Line of credit for phased projects Underwriting looks at Number of units Owner-occupancy ratio Delinquency rate Budget, reserves, and assessment history No personal guarantees from owners 2. Special Assessment Financing (Owner-Friendly Option) Instead of asking owners to write large checks upfront: The association levies a special assessment Owners can finance their portion monthly Reduces resistance and default risk Keeps unit owners on predictable payments This is especially helpful in senior-heavy or fixed-income communities. 3. Reserve Replenishment Loans If reserves were drained for an emergency repair: Association borrows to rebuild reserves Keeps the condo compliant with lender and insurance requirements Helps protect unit values and marketability 4. Florida-Specific Reality (Important) Given your frequent focus on Florida condos, this resonates strongly right now: New structural integrity & reserve requirements Insurance-driven roof timelines Older associations facing multi-million-dollar projects Financing often prevents forced unit sales or assessment shock Many boards don’t realize financing is even an option until it’s explained clearly. 5. How to Position the Conversation (What to Say) You can frame it simply: “Rather than a large one-time special assessment, the association can finance the project and spread the cost over time—keeping dues manageable and protecting property values.” That line alone opens the door. 6. What Lenders Will Usually Ask For Current budget and balance sheet Reserve study (if available) Insurance certificates Delinquency report Project scope and contractor estimate Bottom Line Condo associations do not have to self-fund roofs or major repairs anymore. Financing: Preserves cash Reduces owner pushback Helps boards stay compliant Protects resale values Tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Unexpected retirement expenses can strain senior homeowners
