MBA survey details growing extent of forbearance surge

A new survey released this week by the Mortgage Bankers Association (MBA) is giving a glimpse into the extent of the widespread mortgage forbearance being requested by borrowers impacted by COVID-19.

The MBA’s Forbearance and Call Volume Survey revealed that the total number of loans in forbearance nationwide rose from 0.25% on March 2 to 2.66% on April 1. Moreover, forbearance requests grew by a whopping 1,270% between the week of March 2 and the week of March 16, and another 1,896% between the week of March 16 and the week of March 30.  In sum, 2.73% of total servicing portfolio volume are in forbearance as of April 1.  

Put simply, there has been an unprecedented spike in the number of homeowners looking for assistance with their loans.  

"MBA's survey highlights the immediate relief consumers are seeking as they navigate the economic hardships brought forth by the mitigation efforts to stop the spread of COVID-19," said Mike Fratantoni, MBA's senior vice president and chief economist. “The mortgage industry is committed to providing this much-needed forbearance as mandated by law under the CARES Act.”  

As of April 1, independent mortgage bankers (IMBs) now hold the largest share of loans in forbearance — an indication, perhaps, of their focus on loan programs catering to low- and moderate-income borrowers. Mortgages backed by Ginnie Mae saw the biggest rise in forbearance, increasing from 0.19% to 4.25% from March 2 to April 1. 

Forbearance numbers could keep rising further; chief economist Mark Zandi of Moody’s Analytics forecast that as many as 15 million mortgage carriers — 30% of American homeowners — could request forbearance. 

“It is expected that requests will continue to skyrocket at an unsustainable pace in the coming weeks, putting insurmountable cash flow constraints on many servicers — especially IMBs,” Fratantoni said. 

And as forbearance requests have spiked, so too have hold times at servicer call centers. Three weeks prior, hold times were steadily under two minutes, with abandonment rates at 5%. Since, hold times have ballooned to 17.5 minutes, with an abandonment rate of 25%. 

The MBA’s numbers, which cover some 22.4 million loans (nearly 45% of the first mortgage servicing market), roll in days after the organization joined 14 others in urging the government to establish a liquidity facility to help servicers deal with the veritable torrent of forbearance requests. While lawmakers and regulators have yet to acquiesce, Fratantoni doubled down on pushing for the government to act. 

“To ensure that millions of Americans receive the support they need during the pandemic, it is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors,” he said.