Just prior to COVID-19 shutting down the U.S. economy, the Mortgage Bankers Association (MBA) reported the overall home mortgage forbearance rate was 0.25%. That figure skyrocketed past 3% in early April with the pandemic’s devastating economic impact and has continued on a steep rise as the numbers of newly unemployed Americans surpassed 22 million by the end of April.
Home mortgage forbearance percentage down in June, finally
The latest data available from MBA finds more than 4.2 million homeowners are currently in mortgage forbearance—8.48% of all home mortgage loans. This is down from 8.55% in the prior week, and it is the first time the share of mortgage loans in forbearance has dropped at all since the pandemic began.
Government-backed Ginnie Mae mortgages had the largest overall share of loans in mortgage forbearance at 11.83% for the third week in a row, the MBA reported.
Fannie Mae and Freddie Mac loans in forbearance fell from 6.38% to 6.31%, while private-label mortgage-backed securities and portfolio loans’ forbearance share fell to 9.99% from 10.18.
CARES Act providing relief for millions of homeowners
“The nationwide shutdown of the economy to slow the spread of COVID-19 continues to create hardships for millions of households, and more are contacting their servicers for relief in accordance with the forbearance provisions under the CARES Act,” said Mike Fratantoni, MBA’s senior vice president and chief economist, in a statement Monday, June 22nd.
Declining mortgage forbearance is seen as a sign of housing market health
“Fewer homeowners in forbearance underscores the continued improvements in the job market, and provides another sign of the fundamental health of the housing market,” Fratantoni said. “The big unknown with respect to this positive development is the extent to which it relies upon policy measures put in place to help families through this crisis,” Fratantoni added. “Particularly the stimulus payments and enhanced unemployment insurance benefits that were key parts of the CARES Act opens in a new window.”