2% in July 2020 from 5.2% in June 2020. The decline in delinquency rates is due to the number of borrowers who have taken advantage of various forbearance programs and post-forbearance options offered by banks and mortgage lenders.
The article notes that, according to the latest findings from the Mortgage Bankers Association (MBA), the rate of serious delinquency on single family loans dropped to 4.2% in July 2020 from 5.2% in June 2020. This represents the first time that the rate has decreased since January 2020. It is speculated that this reduction in delinquency is due to the fact that many borrowers have taken advantage of various forbearance programs and post-forbearance options offered by banks and mortgage lenders. In particular, it is likely that those who are in forbearance and under hardship deferment plans have benefited the most from these options.
Furthermore, MBA’s recent data has revealed that the delinquency rate for FHA-insured loans increased slightly from 7.57% in June 2020 to 7.64% in July 2020. The rate for conventional loans, however, decreased from 3.08% to 2.95%, while the delinquency rate for VA loans remained at 4.15%. Additionally, foreclosure starts also decreased from 0.24% in June 2020 to 0.20% in July 2020.
The article also offers a few insights into the ways in which borrowers can use post-forbearance options. It states that once the forbearance period ends, borrowers must decide whether or not they need to extend their forbearance or look for other options. For instance, many lenders offer repayment plans or loan modification programs, in which borrowers may be eligible for a reduced monthly payment, making it easier for them to keep up with their payments. Additionally, borrowers can take advantage of refinance options, either through private lenders or government programs.
Overall, the article concludes that the decrease in serious delinquencies on single family loans indicates that borrowers are taking advantage of various post-forbearance options in order to better manage their debt. Although the foreclosures rate remains slightly above 0.2% of all loans, it is still much lower than the pre-COVID levels, suggesting that lenders and borrowers alike are adapting to the current circumstances and managing to stay on top of their payments.
This article was contributed on Oct 10, 2023
