The U.S. forbearance rate measuring the share of mortgages with suspended payments fell to 6.81% in the last week of September, the lowest since mid-April, according to the Mortgage Banker Association.
The rate dropped from 6.87% in the prior week, MBA said in a report on Monday.
The forbearance rate for Fannie Mae and Freddie Mac loans dropped seven basis points to 4.39%, while the rate for Ginnie Mae loans that include loans backed by the Federal Housing Administration increased one basis points to 9.16%.
“There continues to be a slow and steady decrease in the share of loans in forbearance – driven by consistent declines in the GSE loan share – and a persistently high amount in the Ginnie Mae portfolio,” said Mike Fratantoni, MBA’s chief economist. “The significant churn in the labor market now, more than six months into the pandemic, is still causing financial distress for millions of homeowners.”
About 29% of total loans in forbearance are in the initial plan stage, while 70% are in a forbearance extension, MBA said. The remaining 1.4% are forbearance re-entries, the report said.
The CARES Act passed by Congress at the end of March gave mortgage borrowers the option of suspending their monthly payments for up to 12 months because of the pandemic. Borrowers just have to attest to their mortgage servicer that they have experienced a financial loss because of the health crisis.
The volume of calls from mortgage borrowers to the servicers handling their home loans fell to 6.8%, measured as a share of overall servicing portfolio, from 8.3% in the prior week, the MBA report said.
The average speed to answer a call fell to 2.3 minutes from 3 minutes, and the abandonment rate measuring the share of callers who hung up without speaking to a customer service representative fell to 5.3% from 6.9%, the report said.