The Federal Housing Finance Agency (FHFA) recently extended their mortgage forbearance for multi-family properties through September 30 (now extended indefinitely). However, with other single-family homeowners having already exited their forbearance periods, or soon approaching their exit date, there has been some concern about a rise in mortgage delinquencies. Fortunately, these fears seem to be unfounded and we’re actually seeing a steep decline in delinquencies – even as the total number of loans in forbearance declines as well.
As of September 20, The Mortgage Bankers Associations (MBA) estimates 1.5 million homeowners remain in forbearance plans, but the MBA also reports a decline in the total number of mortgage loans in forbearance by a total of 8 basis points, dropping from 3.08 percent to 3 percent. Specifically:
- Fannie Mae and Freddie Mac loans in forbearance, specifically, decreased by 5 basis points and now sit at 1.47 percent
- Ginnie Mae loans in forbearance remained the same
- Those in forbearance among portfolio loans and private-label securities declined 32 basic points to 6.95 percent
- Those with independent mortgage bank servicers declined 8 basis points, down to 3.25 percent
- Loans in forbearance with depository servicers declined 5 basis points down to 3.10 percent
What numbers are we seeing with delinquencies?
There have been sharp declines in the rate of mortgages considered delinquent. According to Statista, quarter two of 2021 saw a rate of 5.47 percent of mortgages in delinquencies, down from quarter one which sat at 6.38 percent. MBA cites a large improvement in mortgage delinquency rates for multifamily and commercial properties specifically.
What’s the cause for this decline?
HousingWire links it to the unemployment rate, as many spikes in delinquencies correlate to spikes in unemployment rates, while declines also correlate to declines in the unemployment rate. In fact, HousingWire is forecasting a further decline in the unemployment rate, with the delinquency rate following suit.
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