For the third consecutive week, the total number of mortgage loans in forbearance fell.
According to the Mortgage Bankers Association, the rate fell by nearly 9 percent in the last week of June. In addition, Fannie Mae and Freddie Mac loans in forbearance statuses declined to 6.17 from 6.26, marking four weeks of progress.
Unfortunately, about 4.2 million homeowners entered into forbearance as they struggled to fend off the economic fallout brought on by the COVID-19 pandemic.
An improving job market, however, appears to support the charge of fewer distressed homeowners. The improvement and data on forbearance is broad based, indicating an increase in various types of loans.
More good news may be on the way in coming weeks as homeowners’ requests for assistance are also on the decline. Homeowners have found various methods to get back on track, using a blend of programs to find their financial footing and opt out of forbearance.
The number of individuals exiting forbearance through modifications grew from 4.3 percent to 8.3 percent, according to the data; deferral cases grew from 9.3 percent to 16 percent.
As the COVID-19 pandemic intensified, more lenders and banks worked with their customers to find a plan that works for them.
It is important to note that a forbearance does not forgive the debt, and it may lead to credit score changes. Additionally, refinancing may not be possible when homeowners elect to move forward with this option.
Some forbearance guidelines remain unclear as to how servicers and investors will handle repayment. It can take various forms, including adding payments to the backend of the mortgage. Under this arrangement, homeowners may not have to worry about saving for a lump-sum repayment.
If you have any questions about forbearance, please don’t hesitate to contact us.