After historic mortgage delinquency in April, forbearance requests start to slow
Is this a sign that the pandemic-induced crisis is leveling off?

By Emily L. Mahoney
Tampa Bay Times
Published: Jun 4, 2020

The number of homeowners seeking forbearance plans is still rising nationwide, but the rate of increase started slowing in mid-May, according to recently released reports by the Mortgage Bankers Association.

Forbearance plans are used by homeowners to delay mortgage payments for a set period if they are having trouble affording them. They have become a major piece of the nation’s response to the economic tumult caused by coronavirus, as Congress’ pandemic assistance package laid out requirements for forbearance plans for federally backed mortgages. Major banks also have rolled out programs specifically for people harmed financially by COVID-19 business closures.

According to a report released this week, just over 4.2 million homeowners are now in forbearance plans, representing 8.46 percent of mortgages.

“MBA’s survey continues to indicate that fewer homeowners are seeking forbearance as more states across the country reopen their economies and prospects begin to improve,” said Mike Fratantoni, the association’s senior vice president and chief economist.

This news follows a historic spike in April, when past-due mortgages increased by 1.6 million — the largest single-month increase ever recorded, according to Black Knight, a national real estate research firm based in Jacksonville. The number includes anyone who did not pay their mortgage in April, regardless of whether they had a forbearance agreement to defer that payment or not.

That dramatic uptick, which represents a near-doubling of the delinquency rate in March, is yet another reminder of how this sudden, pandemic-induced recession is different than the housing market downturn, during which delinquency rates shot up more gradually. Black Knight said that April’s increase was triple the previous one-month record set in late 2008.

Tampa Bay was among the highest ranked metro areas in the country for its mortgage delinquency rate increase, at No. 11 of the top 50 markets in the country, according to Black Knight. Tampa Bay’s April jump in delinquencies was also greater than the national average, though less than Miami, which was ranked No. 1. Scott Brown, senior economist at St. Petersburg-based Raymond James, an investment bank, pointed to Florida’s many issues with its unemployment benefits system as contributing to people’s inability to make home loan payments.

“That’s been a real struggle, it’s probably the biggest factor,” he said.

Florida as a whole also relies on tourism and retail dollars, sectors that have been disproportionately impacted by the shutdown, Brown noted. But he said it appears the economic effects of the pandemic are bottoming out.

“It does look like we’ve turned the corner," he said. "We could see strong growth but you’re coming off a pretty low bottom.”