Fewer Americans are calling their mortgage managers to ask for reduced mortgage payments, but the housing industry is not out of the woods yet.
More than 4.1 million homeowners currently benefit from leniency plans, according to the latest data from the Mortgage Bankers Association.
While mortgage managers still face the stress of a record flood of loan relief requests, signs suggest that homeowners’ prospects have improved as parts of the country have started to emerge from orders to home. coronavirus.
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Overall, 8.16% of all mortgages were in tolerance as of May 10, which means borrowers can skip or make reduced payments, the trade group said. It rose from 7.91% on May 3, the smallest increase since March. Forbearance requests went from 0.52% of the total mortgage volume to 0.32%.
“There has been a sharp flattening of the loans tested, despite uniformly negative economic data for April, remarkably high unemployment and the May payment deadlines are now past,” said Mike Fratantoni, chief economist. of the Association of Mortgage Bankers, in the report. .
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The possible exception to this trend is the market segment for loans guaranteed by Ginnie Mae, including loans from the Federal Housing Administration (FHA) and Veterans Affairs (VA). Over 11% of Ginnie Mae loans are in default due to the coronavirus epidemic. These loans tend to go to the first home borrowers with lower credit, people who may be more exposed to the economic downturn caused by the pandemic.
While the pace of homeowners asking for forbearance has slowed, the mortgage industry’s problems are not necessarily in sight. A recent report from UK-based economic forecasting company Oxford Economics estimates that 15% of homeowners will fall behind on their monthly mortgage payments.
Prospects for homeowners are likely to depend on their resilience, especially for those who have lost their jobs. The good news for mortgage lenders is that job losses from coronaviruses have been concentrated in the service sector, according to the report from First American Financial
FAF
+ 0.81%,
A title insurance company. Because these jobs are less skilled and less well paid, new unemployed people are less likely to own housing.