The Mortgage Bankers Association’s latest Forbearance and Call Volume Survey finds that that the total number of loans now in forbearance has decreased for the 7th week in a row.
- Total number of loans now in forbearance decreased by 6 basis points to 5.14%
- 2.6 million homeowners are in forbearance plans according to MBA estimates
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said in a statement, “”One year after the onset of the pandemic, many homeowners are approaching 12 months in their forbearance plan. That is likely why call volume to servicers picked up in the prior week to the highest level since last April…”
Forbearance doesn’t always equal foreclosure, but it is something that many are worried about. In fact, ATTOM data solutions is reporting an uptick in foreclosures in February.
- Lenders repossessed 1,545 U.S. properties through completed foreclosures in February 2021, up 8 percent from last month.
- Despite an uptick from last month foreclosures are still down 85% from last year.
Rick Sharga, executive vice president of RealtyTrac, explained in a statement why forbearance is up but foreclosures are down, “These government actions, and the efforts of lenders and mortgage servicing companies, have helped millions of homeowners avoid foreclosure during a year-long global pandemic and a recession that resulted in 22 million lost jobs.”
Even with many homeowners reaching 12 months in forbearance, a foreclosure wave could still be adverted. For one, Fratantoni notes that “Homeowners with federally backed loans have access to up to 18 months of forbearance.” It should also be noted that Goldman Sachs recently upgraded their projections for the year noting they now expect “8% growth in 2021 (Q4/Q4) and an unemployment rate of 4% at end-2021.
Forbearance extensions and a booming economy could be the perfect recipe to prevent a wave of foreclosures from happening in 2021.