Mortgage

Excessive jobless claims put an finish to the sharp decline in indulgence

After declining 23 basis points for each of the past two weeks, the pace of coronavirus forbearance mortgages declined only a single basis point between August 10 and 16, according to the Mortgage Bankers Association.

The rate declined for the tenth straight week, with 7.2% of all outstanding loans – an estimated 3.6 million – included in forbearance plans, compared with 7.21% and about 3.6 million the week before. The share of forborne loans from independent mortgage lending service providers rose from 7.42% to 7.43%, while depositaries fell from 7.49% to 7.48% in the same period.

"The extremely high number of initial jobless insurance claims and high unemployment remain a concern and an indication of the challenges faced by many households," said Mike Fratantoni, senior vice president and chief economist of the MBA, in a press release. "While new forbearance requests, particularly for loans from Fannie Mae and Freddie Mac, remain low, the pace of forbearance exits has slowed for two weeks."

The latest Labor Department report on unemployment insurance claims found that in the week ended August 15, claims rose 135,000 to a total of 1.1 million.

"This number is a reverse of the previous week's decline and shows that the continued labor market recovery will be bumpy and expected week-to-week fluctuations," said Doug Duncan, chief economist at Fannie Mae, in a press release. "The number of initial claims is still well above the peak of the previous recession and we note that the headline does not include an additional 543,000 claims submitted under the Pandemic Unemployment Assistance program, an increase from the previous week. "

The leniency rate of compliant mortgages purchased by Fannie Mae and Freddie Mac decreased from 4.94% to 4.93%. Ginnie Mae's loans – Federal Housing Administration, Department of Veterans Affairs, and U.S. Department of Agriculture Rural Housing products – were flat at 9.54%.

Private label securities and portfolio loans – products not covered by the Coronavirus Relief Act – rose again this week, from 10.34% to 10.37%.

Forbearance inquiries as a percentage of the service portfolio volume decreased from 0.11% to 0.1%, while the call center volume as a percentage of the portfolio volume increased from 7.9% to 8.7%.

The MBA sample for this week's survey includes a total of 51 servicers with 26 independent mortgage lenders and 23 custodians. The sample also included two subservicers. Based on the number of units, respondents accounted for around 75% or 37.3 million of the outstanding first liens.

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