First the good news, the latest Forbearance and Call Volume Survey found that the total number of loans now in forbearance decreased by 24 basis points, according to the Mortgage Bankers Association (MBA)
- Loans in forbearance fell to to 4.66% from 4.90% the prior week.
- MBA estimates that 2.3 million homeowners are in forbearance plans, a decline of 2.5 million from the prior week.
Now the bad news, while delinquencies have fallen to the lowest they’ve been since the onset of the pandemic, they are 60% higher than they were a year ago according to CoreLogic. (CL)
- In January 2021, 5.6% of mortgages were delinquent by at least 30 days or more including those in foreclosure. This is a jump of 2.1% from January 2020.
- Of the 5.6% delinquent loans, 3.1% were 120+ days late. This is an increase of 240% from January 2020.
Obviously, a lot of politicians still have PTSD from the ’08 crash and when they see serious delinquencies spike, they get very nervous. This explains why the Biden administration could extend the foreclosure ban till 2022. However, most economists believe that the real estate market could absorb most of the foreclosures with little damage to the overall sector. In fact, with inventory levels at historic lows and bidding wars on almost every single property, an additional million homes would probably be welcomed with open arms.