Mortgage Forbearance Requests Increase Amid Coronavirus Surge
Following a recovery in borrowers' payments, mortgage forbearance requests drastically increased last week amid a resurgence of coronavirus cases, according to CNBC.
Last week, the number of active forbearance plans increased by 79,000 and erased almost half the recovery since the peak on May 22, according to Black Knight, a mortgage data and technology firm. There are currently 4.68 million homeowners in forbearance plans or 8.8 percent of all active mortgages. This number represents about $1 trillion in unpaid principal.
The mortgage bailout program allows borrowers to miss monthly payments for at least three months under the CARES act. The payments can be remitted either in repayment plans, loan modifications, or when the home is sold or the mortgage refinanced.
The hope with the mortgage bailout program was that once the coronavirus subsided and the economy started to recover people would be able to pay their mortgage again. This was the case at first, but many are still in need of the program.
6.9 percent of all Fannie Mae and Freddie Max backed loans along with 12.5 percent of all FHA/VA loans are in forbearance plans.9.6 percent of loans from banks or the private sector are in forbearance as well.
FHA borrowers in forbearance plans increased by 42,000 last week. Current circumstances could require lenders to advance up to $3.5 billion per month to holders of government-back mortgage securities. In addition, $1.4 billion in tax and insurance payments will be required.