3.6 million homeowners are in forbearance plans, a 7.16% share of all home loans, MBA says.
The U.S. forbearance rate in the last week of August fell to the lowest level since mid-April, according to the Mortgage Bankers Association.
The rate dropped to 7.16% from 7.2% in the prior week, MBA said in a report on Tuesday.
The forbearance rate for Fannie Mae and Freddie Mac loans dropped eight basis points to 4.8%, while the rate for Ginnie Mae loans that include loans backed by the Federal Housing Administration increased four basis points to 9.62%.
“High unemployment, and jobless claims consistently around 1 million a week, continue to cause financial strain for some borrowers – and especially for those who work in industries hardest hit by the pandemic,” said Mike Fratantoni, MBA’s chief economist.
The U.S. unemployment rate fell to a five-month low of 8.4% in August, tumbling almost 2 percentage points from July’s 10.2% rate, the Labor Department said on Friday.
The economy has added back almost half of the 22.2 million jobs lost in the pandemic that started hitting the U.S. in March. With the hiring of 10.6 million Americans in recent months, that leaves the nation’s labor market 11.6 million jobs short of where it was in February.
The CARES Act passed by Congress at the end of March gave mortgage borrowers the right to up to 12 months of forbearance, meaning an agreement to suspend payments without penalties. All a borrower with a government-backed loan has to do is attest to having a financial difficulty caused by the pandemic.
The volume of calls from mortgage borrowers to the servicers handling their home loans was flat with the prior week, at 7.2%, the MBA report said.
The average speed to answer a call rose to 2.4 minutes from 2.2 minutes, and the abandonment rate measuring the share of callers who hung up without speaking to a customer servicer representative rose to 5.1% from 4.9%, the report said.