[COVID-19] MBA’s Latest Survey Shows Significant Increase in Number of Loans in Forbearance

April 15, 2020 by Dennis R. Baranowski, Esq.

As individuals and businesses are increasingly feeling the economic impact of government restrictions aimed at curbing the impact of COVID-19, they are turning to their lenders in increasing numbers seeking temporary relief to help them weather the current storm.

This trend is exhibited in the most recent Forbearance and Call Volume Survey conducted by the Mortgage Bankers Association (MBA), which encompasses nearly 54% of the first-mortgage servicing sector accounting for 26.9 million loans. Between March 30 and April 5, loan forbearances for all types of loans rose sharply from 2.73% to 3.74%. The greatest increase in forbearances (1.58%) was experienced with Ginnie Mae-backed loans, which also represented  the greatest overall share in forbearance requests by investor type (5.89%). Independent mortgage bank (IMB) servicers have the highest percentage of mortgages in forbearance, at 4.17%.

Key Takeaways from the MBA’s Most Recent Forbearance and Call Volume Survey, March 30 – April 5:

  • Aggregate mortgages that were in forbearance increased relative to the preceding week, from 2.73% to 3.74%. For comparison, during the week of March 2, there were only one-quarter of loans that were in forbearance.
    • Categorized by the type of investor, Ginnie Mae-backed mortgages experienced the greatest increase in relation to the previous week—rising from 4.31% to 5.89%.
    • The percentage of Fannie Mae and Freddie Mac mortgages in forbearance rose from 1.69% to 2.44% over the course of the week.
  • Requests for forbearance as a share of servicing portfolio volume increased during the week from 1.36% to 2.43%.
  • Average loan servicer call center volume rose overall from 11.6% to 14.4%, as well as the median call length from 7.3 minutes to 7.5 minutes; whereas hold times fell from 13 minutes to 10.3 minutes. Abandonment rate percentage also decreased from 21% to 17%.
  • As of April 5, loans that were in forbearance as a percentage of servicing portfolio volume:
    • Overall: Increased from 2.73% to 3.74%
    • IMBs: Increased from 3.45% to 4.17%
    • Banks: Increased from 2.24% to 3.63%

In addition to the increase in forbearances over the first week of April, there were also increases in requests for forbearances and overall loan servicer call center volume. With the imposed lockdown appearing to remain in place for the foreseeable future, unemployment is expected to continue to rise at an unprecedented pace along with the number of debtors requesting forbearance.

ABOUT THE AUTHOR

Dennis Baranowski, Esq. has extensive experience in helping banks, credit unions, mortgage funds, private lenders, brokers, developers, and loan servicers navigate through complex transactions, including negotiation of terms, transaction review, and drafting of documents. Mr. Baranowski reviews, negotiates and drafts custom loan documents, construction loan agreements, loan workout agreements, leases, loan purchase and sale agreements, subordination agreements, intercreditor agreements, hypothecations, loan servicing agreements, and investor agreements. He has authored articles on loan purchase and sale agreements, investment in private loans, and loss mitigation after default.

In addition, Mr. Baranowski also has experience in default-related legal services including foreclosure, bankruptcy, and loss mitigation, as well as lender compliance. Mr. Baranowski believes in dedicated, constant communication, and providing swift, custom, effective, and efficient solutions to client problems. Mr. Baranowski understands that his role is not to stand in the way of a transaction, but to be a trusted guide in all lending matters.

If you have questions on how COVID-19 is affecting your business, contact Geraci Law Firm here.

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