AZ Forbearance Update (Video) 10/28/2020

In this 12 minute video, Lydia Wietsma and I discuss the latest news in forbearance and emerging trends and improvements in the situation and options. The bottom line is that people have options but they have to take action, watch the full video for details.

Today’s Takeaways:

Forbearance:

Straight from MBA, “WASHINGTON, D.C. (October 26, 2020) – The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 2 basis points from 5.92% of servicers’ portfolio volume in the prior week to 5.90% as of October 18, 2020. According to MBA’s estimate, 3.0 million homeowners are in forbearance plans. 

By stage, 25.02% of total loans in forbearance are in the initial forbearance plan stage, while 73.14% are in a forbearance extension. The remaining 1.84% are forbearance re-entries.”

This decrease is much smaller than the previous two weeks decreases when roughly 400,000 loans came out of forbearance.

One reason given for the 400,000 borrowers exiting forbearance plans over the past three weeks is because borrowers do not know they can stay on or further negotiate their plans. If borrowers do not contact their lenders or servicers they are automatically removed from their forbearance plan. This is a big deal.

News:

FHFA and FHA extended pandemic forbearance plan options to single-family owners with FHA loans through 12/31/2020. It was initially set to expire 10/30/2020. FHA forbearance plans are 6 months with an option to extend for an additional 6 months.

Delinquencies:

From the September Black Knight First Look Report all about delinquencies:

• “The number of seriously delinquent mortgages (90+ days) fell by 43,000 in September, marking the first such improvement in serious delinquencies since the start of the pandemic
• More than 2.3 million homeowners – five times the number entering 2020 – remain 90 or more days past due, but not in foreclosure
• The national delinquency rate fell in September to 6.66%, down from 6.88% the month prior
• Early-stage delinquencies continue to show strong improvement, with rolls from current to 30-days delinquent, as well as the number of borrowers less than 90 days delinquent, having returned to pre-pandemic levels”

Lending:

According to the MBA, purchase mortgage originations for 2021 are expected to increase by 8.5% from 2020. They expect 2021 will hit an all-time record of $1.54 trillion for purchase originations!

Rates are also expected to rise in 2021 likely to reach 3.3-3.5%

Real Estate:

Existing home sales surged 21% in September year over year, pushing us to a seasonally adjusted annual rate of 6.5 million sales, all while inventory is at record lows. (NAR)

• Pre-pandemic 2020 projections were for about 5.8 million sales.
• In 2019 there were 5.35 million sales.
• In 2018 there were 5.5 million sales.