The number of U.S. homeowners who have stopped making mortgage payments is surging under the federal government’s new forbearance program, according to a survey from the Mortgage Bankers Association.
Requests to delay mortgage payments grew by 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, according to the MBA.
The Cares Act mandates that all borrowers with government-backed mortgages – about 62% of all first lien mortgages according to the Urban Institute – be allowed to delay at least 90 days of monthly payments and possibly up to a year’s worth. Those payments must ultimately be remitted either at the end of the loan term or in a structured modification plan.
“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,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist.
For the week of March 23 through March 29, caller requests numbered 218,718. That number jumped to 717,577 requests in the following week, according to a MBA calculation.
Among the loans sampled, from March 2 to April 1, total loans in forbearance grew from 0.25% to 2.66% of total servicing portfolios. Ginnie Mae loans in forbearance had the highest volume and grew most significantly from 0.19% to 4.25%.
Servicers are reporting that wait times for their customer service representatives jumped to almost 18 minutes from less than two minutes three weeks earlier, according to the MBA. It could get worse: As Americans lose jobs by the millions, mortgage companies say they’ll soon get overwhelmed.
Mark Zandi, chief economist for Moody’s Analytics, forecasts that as much as 30% of homeowners could stop paying their mortgages.