The latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased slightly from last week (Mortgage Bankers Association)
- Total loans now in forbearance decreased to 5.35% from 5.38% the week before
- Initial stage loans made up 16.52% of total loans in forbearance
- Forbearance extension made up 80.98% of total loans in forbearance
Concerns remain about the current recovery and lack of jobs when compared to pandemic levekls Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said in a statement, “The job market rebounded slightly in January following a decline in December, but there are still 6.5 percent fewer jobs in the U.S. economy compared to February 2020.
Fratantoni is not alone. The New York Times on Sunday wrote about the toll the pandemic is having on housing,
“A study by the Federal Reserve Bank of Philadelphia showed that tenants who lost jobs in the pandemic had amassed $11 billion in rental arrears, while a broader measure by Moody’s Analytics, which includes all delinquent renters, estimated that as of January they owed $53 billion in back rent, utilities and late fees. Other surveys show that families are increasingly pessimistic about making their next month’s rent, and are cutting back on food and other essentials to pay bills.”
Making matters worse, the Q4 MBA & Research Institute for Housing America found that, “Five million households did not make their rent or mortgage payments in December, and 2.3 million renters and 1.2 million mortgagors said they feel they are at risk of eviction or foreclosure, or would be forced to move in the next 30 days.” (MBA)
There is some good news. Fewer renters and mortgagors missed payments in December
- MORTGAGE: 5% of mortgagors missed payments in December, down from 7% in September
- RENT: 7.9% of renters missed a payment in December, down from 8.4% of September
Also in the good news category, property owners continue to play a key role in helping renters. 12% of renters received permission from their landlord to delay or reduce their monthly payment. However, this can’t continue in perpetuity as rental property owners lost as much as $7.2 billion in fourth-quarter revenue from missed rent payments. This is down from Q3, but obviously not something that can’t continue without either significant help from the government or a faster recovering economy.
THE FUTURE: As mentioned above, the losses are really piling up for landlords and a good portion of tenants are not confident things will turn around anytime soon. 2.3 million renters feel they are at risk of eviction or being forced to move in the next 30 days. The markets will take care of this as the economy recovers. That, however, will mean some people will get evicted. Not as many as most think, but it will happen. If the government wants to avoid this situation they can target some of that trillion dollar stimulus spending right at housing.