Mortgage payments for the month of April are not even officially late until the 15th, but borrowers are flooding into the government's mortgage forbearance program.
Requests to delay mortgage payments grew by 1,270% between the week of March 2 and the week of March 16, and another 1,896% between the week of March 16 and the week of March 30, according to numbers released Tuesday by the Mortgage Bankers Association. It includes data on 22.4 million loans serviced as of April 1, almost 45% of the first lien mortgage servicing market.
The Cares Act, which President Donald Trump signed March 27, seeks to limit the economic damage from COVID-19. The government implemented the mortgage relief measures before Trump signed the bill. It mandates that all borrowers with government-backed mortgages — about 62% of all first lien mortgages according to the Urban Institute — be allowed to delay at least 90 days of monthly payments and possibly up to a year's worth. Those payments must ultimately be remitted either at the end of the loan term or in a structured modification plan.
For the week of March 23 through March 29, caller requests numbered 218,718. That number jumped to 717,577 requests in the following week, according to a Mortgage Bankers Association calculation. Mortgage servicers are required to grant forbearance to any borrower who requests it with no documentation of hardship necessary.
Among the loans sampled, from March 2 to April 1, total loans in forbearance grew from 0.25% to 2.66% of total servicing portfolios. Ginnie Mae loans in forbearance had the highest volume and grew most significantly from 0.19% to 4.25%. These loans, which represent FHA and VA loans, generally have lower down payments and are granted to borrowers with lower credit scores.
It is also getting more difficult for borrowers to get through to their mortgage servicers to make these forbearance requests. Call center average speed to answer reached 17.5 minutes from under two minutes three weeks ago. About 25% of borrowers are abandoning the calls compared with 5% three weeks ago.