New forbearance plans have flattened after the Covid spike in March.
But ACTIVE forbearance plans remains high.
According to Attom, foreclosure starts are rising rapidly in New York and Chicago.
The MBA estimates 3.4 million homeowners are currently in forbearance plans. And if forbearance isn’t continued, a potentially high percentage of these loans could end up in default.
So we could have a mortgage default crisis on our hands. If forbearance doesn’t stop the impacts of Covid because of soaring, yet improving unemployment.
Rental markets? The CARES Act provided direct payments to households and if the government shutdowns persist, we could see an increased in defaults on multi-family properties. Freddie Mac’s forborne multifamily loans are concentrated in New York with 25.4% in forbearance followed by Texas with 13.4%.
The magnitude of the losses if the CARES Act isn’t extended? It depends on who wins in November.
But at we now know why Wells Fargo is trying to dump their $10 billion student-loan portfolio. The bank said earlier this month that it had notified customers of its planned exit from the student-lending business. PARTICULARLY IF THE CARES Act isn’t expanded OR governments stop their lockdown of economies.
The good news? The CARES Act money has not been completely spent … yet. But come January, watch out
Covid through the mortgage market for a loop. Normally mortgage purchase applications peak in late April or early May, but in 2020 unadjusted purchases applications peaked in mid-June thanks to Covid-19.
Here is a chart showing the seasonality of mortgage purchase applications. And how mortgage purchase application are 26 percent higher than the same week one year ago.
Refi applications? Essentially flat with an increase of only
Just when we thought the US mortgage market had recovered from the financial crisis, then along came Covid and The Federal Reserve helping to push mortgage rates to near all-time lows.
According to Black Knight, the share of borrowers with only one missed payment was already below pre-pandemic levels in July and in August that number fell again. The number of loans in the 30- to 60-days past due bucket dropped by other 9.0 percent. At the same time, serious delinquencies, loans 90 or more days past due, increased by 5 percent and have risen in each of the past five months.
The transition from 30 days delinquent to 60 days late was falling as expected but showed a disturbing uptick in August.
Compared to natural disasters such as hurricanes, this time it is different PRIMARILY BECAUSE OF GOVERNMENT ECONOMIC SHUTDOWNS.
Most mortgages in forbearance remain in active forebearence and had the term extended DUE TO GOVERNMENT LOCKDOWNS OF SEVERAL KEY ECONOMIES.
But with US GDP growth expected to recover at a rate of 34.602%, look for forbearances and 30 day delinquencies to fade.