Mortgage forbearance surged on April 1: report

Moody’s Analytics predicts up to 30% of US homeowners could stop payments

TRD NATIONAL /
Apr.April 08, 2020 09:55 AM
Homeowners are halting mortgage payments as forbearance rates surge. (Credit: iStock)

Homeowners are halting mortgage payments as forbearance rates surge. (Credit: iStock)

As tenants struggle to pay rent, homeowners are struggling to make mortgage payments.

The rates of mortgages in forbearance surged April 1 to 2.66 percent from 0.25 percent at the start of March, according to Bloomberg. It comes as Moody’s Analytics’ chief economist expects that up to 30 percent of homeowners may stop making mortgage payments.

The federal government has instructed lenders handling mortgages backed by the government to give borrowers up to six months grace periods, and loan servicers have been inundated with calls from borrowers. Some states are taking similar measures.

In New York, Gov. Andrew Cuomo signed an executive order that required state-regulated banks to communicate to borrowers how to receive 90 days of forbearance on mortgage payments. He also specified that requests should be processed within 10 days.

But loan servicers are still on the hook to pay bondholders, which is leading to a liquidity crunch for independent mortgage companies that can’t count on the government to backstop losses like banks can.

Fitch Ratings warned that nonbank lenders could be especially vulnerable if forbearance becomes prevalent and put seven nonbank lenders on negative-rating watch at the end of March.

According to the Mortgage Bankers Association, 3.45 percent of loans held by nonbank lenders have gone into forbearance. According to the Wall Street Journal, about 60 percent of U.S. home mortgages are originated by nonbank lenders. [Bloomberg] — Erin Hudson


Related Articles

arrow_forward_ios
(Credit: iStock)

Loophole allowed big-name landlords to get bailout funds

Loophole allowed big-name landlords to get bailout funds
Despite record-low interest rates, tightened mortgage lending standards which may hamper the economic recovery. (iStock)

Tightening mortgage market threatens economic recovery

Tightening mortgage market threatens economic recovery
The process for challenging property assessments is so antiquated, officials won’t do Zoom meetings. (iStock)

“A recipe for disaster”: Fighting property taxes in a pandemic

“A recipe for disaster”: Fighting property taxes in a pandemic
Clockwise from left: Bronx housing court at 1118 Grand Concourse, Governor Andrew Cuomo, Judge Lawrence Marks, New York Supreme Court at 60 Centre Street (Getty; Google Maps; Wikipedia; New York State Courts)

Attorneys find ways to “eject” tenants without Housing Court

Attorneys find ways to “eject” tenants without Housing Court
Cadillac Fairview CEO John Sullivan and the RCB Centre in Toronto (Google)

This Canadian office giant has a strategy for a return to work

This Canadian office giant has a strategy for a return to work
Bars, restaurants and live entertainment venues around the world are now weighing their reopening options. Some owners say they can’t cover the cost of operating at reduced capacity. (Getty)

Facing the music: Entertainment venues, restaurants weigh reopening options

Facing the music: Entertainment venues, restaurants weigh reopening options
Anbang’s Andrew Miller, Mirae’s Peter Lee and (from left) JW Marriott Essex House, the Westin St. Francis in San Francisco and the Four Seasons in Jackson Hole (Credit: Marriott, Westin, Four Seasons)

Buyer’s remorse?: How Anbang’s $5.8B hotel deal went sideways

Buyer’s remorse?: How Anbang’s $5.8B hotel deal went sideways
Softbank's Marcelo Claure, Masayoshi Son and Rajeev Misra (Getty; iStock)

Internal feud at SoftBank casts doubt on Vision Fund

Internal feud at SoftBank casts doubt on Vision Fund
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...