After a decline of three weeks, the number of borrowers delaying monthly mortgage payments due to coronavirus has risen again.
According to Black Knight, a mortgage data and technology company, over the past week the number of active disclaimers has increased by 79,000, which has led to a decrease in about half of the improvements made since the May 22 peak. For comparison: the number of borrowers in plans to combat omission fell by 57,000 in the previous week. The increase has occurred every day for the past five business days.
As of Tuesday, 4.68 million homeowners had plans for abandonment, which allowed them to defer payments on mortgages for at least three months. This represents 8.8% of all active mortgage loans, compared with 8.7% last week. Together, they amount to just over $ 1 trillion in unpaid principal.
A mortgage assistance program, part of the CARES Act, which President Donald Trump signed in March of this year, allows borrowers to skip monthly payments for at least three months, and possibly up to a year. These payments can be transferred either to repayment plans, loan modifications, or when the house is sold or the mortgage is refinanced.
While some borrowers who originally requested mortgages in March and April ended up paying their monthly installments, the vast majority do not. Mortgage recovery rates were expected to improve as the economy recovered and jobs fell. But this surge is a red signal for a market in which homeowners are still struggling as coronavirus cases continue to grow in several states.
By type of loan, 6.9% of all mortgages secured by Fannie Mae and Freddie Mac, and 12.5% of all FHA / VA loans are currently in foreclosure plans. Another 9.6% of loans in securities under private labels or in portfolios of banks are also in denial.
Volumes increased for all types of loans, but were the sharpest for FHA / VA loans. FHA offers low down payment loans for borrowers with a lower credit rating. Such loans are popular among beginner home buyers. The number of FHA / VA borrowers in disclaimers increased by 42,000 last week, while government support and loans to non-agent organizations increased by 25,000 and 12,000, respectively.
At today’s level, mortgage servicing agents may require advance payments of up to $ 3.5 billion. US per month to holders of state-supported mortgage-backed securities for abstinence related to Covid-19. This is in addition to the $ 1.4 billion in tax and insurance payments that they must make on behalf of borrowers.