The MBA announced in a Monday news release that its latest “Forbearance and Call Volume Survey” found that the total number of loans in forbearance had risen from 7.91% of servicers’ portfolio volume on May 3 to 8.16% by May 10.
Forbearance is an agreement made between a borrower and mortgage servicer or lender, allowing the borrower to pause or suspend mortgage payments for a defined period of time without worry of going into foreclosure.
A borrower who receives forbearance does not have their payments forgiven or removed from the mortgage. They are simply delayed to a later date.
"There has been a pronounced flattening in loans put into forbearance - despite April's uniformly negative economic data, remarkably high unemployment, and it now being past May payment due dates,” Mike Fratantoni, the MBA's senior vice president and chief economist, said in the May 18 news release.
Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, American homeowners suffering financial hardship from the pandemic are eligible to request forbearance for up to 180 days. Following that period, a borrower may also contact their loan servicer and request a 180-day extension of forbearance.
Furthermore, the CARES Act blocked lenders and loan servicers from starting a judicial or non-judicial foreclosure against a borrower, or finalizing a judgment on a foreclosure, for 60 days.
Citing a report from Oxford Economics, MarketWatch reported that despite the assistance extended through the CARES Act, around 15% of US homeowners will find themselves falling behind on their monthly mortgage payments.