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Millions of Americans remain unable to afford their monthly mortgage payments, even as some state economies begin to slowly reopen amid early indications the severity of the U.S. coronavirus outbreak may be waning.
The total number of loans in forbearance as of May 3 increased to 7.9 percent, according to data from the Mortgage Bankers Association, which is up from 7.54 percent the previous week. Nearly 4 million Americans have entered into forbearance agreements, allowing them to temporarily pause their mortgage payments.
The uptick had been expected because many mortgage payments are due at the beginning of the month. The good news, however, is that the pace of the increase slowed, but experts warn it could soon pick up again.
“Although the pace of forbearance requests slowed this week, call volume picked up, which could be a sign that more borrowers are calling in to check their options now that May due dates have arrived,” Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said in a statement.
Another sign more trouble could be on the way was the bleak April jobs report. Since mid-March, 33 million Americans have filed jobless claims since mid-March, the unemployment rate skyrocketed to 14.7 percent in April, as the U.S. shed an unprecedented 20.5 million jobs.
Part of the multitrillion-dollar stimulus package passed by lawmakers called for lenders, including Fannie and Freddie, to allow people to put their payments on hold if they are experiencing coronavirus-related financial difficulties.
The upside of the forbearance policy is that it could position the market for a quicker rebound once the economic situation normalizes.
“Less foreclosures assure stable home prices and a much better position for the economy to return back to normal after the pandemic,” Lawrence Yun, chief economist and senior vice president at the National Association of Realtors, told FOX Business.
However, those who can continue making regular payments should do so, Yun advised.
The persistent uptick in Americans entering forbearance agreements led the U.S. government to take action to ease the liquidity concerns of creditors last month by establishing a four-month advance obligation limit on interest and principal payments for loans in forbearance.