Coronavirus mortgage bailouts immediately swell as householders face new struggles

Signage will be posted on Tuesday, October 1st, 2019, in front of Freddie Mac's headquarters in McLean, Virginia, USA.

Andrew Harrer | Bloomberg | Getty Images

After a three-week decline, the number of borrowers who delayed their monthly mortgage payments due to the coronavirus rose again sharply.

According to Black Knight, a mortgage data and technology company, the number of active forbearance plans increased by 79,000 last week, wiping out about half of the improvements seen since the May 22 peak. For comparison: the number of borrowers in forbearance plans decreased by 57,000 in the previous week. There has been daily growth over the past five business days.

By Tuesday, 4.68 million homeowners had forex plans so that they could delay their mortgage payments by at least three months. This corresponds to 8.8% of all active mortgages compared to 8.7% in the last week. Together, they represent just over $ 1 trillion in unpaid capital.

The mortgage bailout program, which is part of the CARES law that President Donald Trump signed in March, allows borrowers to miss monthly payments for at least three months and possibly up to a year. These payments can be made either in repayment schedules, loan changes or when selling your home or refinancing the mortgage.

While some borrowers who originally asked for mortgage bailouts in March and April made their monthly payments, the vast majority do not. There were expectations that mortgage bailout numbers would improve if the economy reopened and job losses slowed. But this surge is a red flag for the market that homeowners are still struggling with as coronavirus cases continue to increase in several states.

By loan type, 6.9% of all mortgages supported by Fannie Mae and Freddie Mac and 12.5% ​​of all FHA / VA loans are currently in forbearance plans. Another 9.6% of loans in private label securities or bank portfolios are also forgiving.

Volume increased for all types of loans, but was strongest for FHA / VA loans. FHA offers low down payment loans to borrowers with lower credit scores. Such loans are popular with first-time buyers. The number of FHA / VA borrowers in forbearance plans increased by 42,000 last week, while indulgence in government-sponsored corporate and non-agent loans increased by 25,000 and 12,000, respectively.

At today's level, mortgage service providers may have to pass up to $ 3.5 billion a month to government-backed mortgage holders for forbearance related to Covid-19. This adds to tax and insurance payments of up to $ 1.4 billion that they have to make on behalf of borrowers.

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