Banks see coronavirus-related forbearance requests triple in 2 weeks

Surging unemployment from COVID-19 shutdowns brought a rapidly rising tide of forbearance requests, according to the Mortgage Bankers Association.

Between April 6 and April 12, total loans with forbearance requests jumped to 5.95% from 3.74% the prior week and 2.66% the week before that. Comparatively, on the week of March 2, before the ill financial effects of the pandemic were felt, only 0.25% of all loans sat in forbearance.

The percentage of total loans with forbearance for nonbanks increased to 5.69% from 4.17% the week before and 3.45% the week before that. For banks, the percentage hit 6.57% between April 6 and 12, up from 3.63% the week prior and 2.24% from March 23 to 29.

"Mortgage servicers continue to receive a very high level of forbearance requests, but volumes were down somewhat compared to the prior week," Mike Fratantoni, senior vice president and chief economist at the MBA, said in a press release. "Given that lockdowns and associated job losses will continue in the coming weeks, forbearance inquiries will likely rise again as we approach May payment due dates."

In part, the rising volumes reflect shortened processing times during the period. Average hold times dropped to 4.9 minutes from 10.3 minutes the week prior. Call abandonment rates nearly halved, falling to 9.7% from 17%.

Ginnie Mae had both the highest share and largest growth in forbearance on the government loans it securitizes. Ginnie's forbearance volume rose to 8.26% from 5.89% while the share of Fannie Mae and Freddie Mac loans with forbearance increased to 4.64% from 2.44%.

Ginnie Mae recently launched liquidity assistance for issuers struggling to advance principal-and-interest payments, while the CFPB and FHFA came out with a data sharing plan to help address complaints and misconceptions in Fannie and Freddie loan servicing.

"Mortgage servicers are performing an essential function of the housing finance system by continuing to advance funds to investors at a time when roughly 3 million homeowners are now in forbearance," Fratantoni said. "To ensure market stability during these challenging times for consumers and the entire industry, servicers need access to interim financing so that they can continue to play this critical role."

The association's survey includes data from more than 38.3 million loans, representing nearly 77% of the first-mortgage servicing market.

The CARES Act, passed in March, mandates that government-related loan providers must allow forbearances of up to six to 12 months without penalty for borrowers with coronavirus-related hardships. However, consumers can still be considered liable for paying the full amount due in the future if they put payments on hold.