The number of homeowners who asked lenders for more time to pay their mortgages increased to record levels in March, as borrowers feel the impacts of the coronavirus.
A new survey by the Mortgage Bankers Association (MBA) found the total number of loans where the lender agreed to temporarily reduce or suspend mortgage payments grew to 2.7 percent from 0.25 percent between March 2 through April 1.
The organization found the rise in forbearance requests was highest among mortgages backed by the government agency Ginnie Mae, at 4.25 percent, up from 0.19 during the same period.
“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 MBA Chief Economist Mike Fratantoni in a statement. “The mortgage industry is committed to providing this much-needed forbearance as mandated by law under the CARES Act. It is expected that requests will continue to skyrocket at an unsustainable pace in the coming weeks, putting insurmountable cash flow constraints on many servicers — especially IMBs [independent mortgage banks].”
As of April 1, IMB servicers have the largest share of loans in forbearance at 3.45 percent, in part because many of the Federal Housing Administration and Veterans Affairs mortgage programs serve low-to moderate income borrowers, researchers found.
The survey said requests to delay home loan payments grew by 1,270 percent between March 2 and March 16. Another 1,896 percent were recorded between March 16 and March 30.
“To ensure that millions of Americans receive the support they need during the pandemic, it is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors,” Fratantoni added.
The survey was taken during the week of April 1. The data covers 22.4 million loans serviced and represents nearly 45 percent of the first mortgage servicing market.