Mortgage Relief Requests Skyrocket As Homeowners Feel The Burn Of COVID-19


Homeowners are seeking mortgage relief in record-breaking numbers. 

According to the Mortgage Bankers Association, forbearance requests jumped 1,270% between March 2 and March 16 and another 1,896% between March 16 and March 30. In total, 2.66% of all mortgage loans are now in forbearance—a type of relief program that allows borrowers to pause payments for an established period of time.

Jeff Taylor, whose Digital Risk platform powers some of the nation’s biggest loan servicers, says the uptick in forbearance requests has been “staggering” in recent weeks.

“Each of the top five servicers has already received more forbearance requests in the last month than in the entire financial crisis of 2008,” says Taylor, managing partner at Digital Risk. “Servicers are up over 50 times in forbearance requests in one month compared to an entire normal year like 2019.”

MBA’s data shows that the number of loans in forbearance jumped from just 0.25% of all mortgages to 2.66% over the course of March. 

According to Mike Fratantoni, MBA’s senior vice president and chief economist, the requests are hitting independent mortgage bank servicers (non-depository servicing companies) the hardest. Among loans serviced by these organizations, 3.45% are now in forbearance.

Mr. Cooper is one of such independent servicer seeing a surge in requests. According to an 8-K form filed with the SEC on Monday, the company has placed 86,000 borrowers on forbearance plans—a whopping 2.5% of all its customers. The servicer has processed anywhere from 8,000 to 22,000 forbearance requests per day since March 27, the day the CARES Act was signed into law.

An 8-K filing from service Ocwen also shows significant forbearance volume. As of March 31, the company has issued 27,500 forbearances. 

“It is expected that requests will continue to skyrocket at an unsustainable pace in the coming weeks, putting insurmountable cash flow constraints on many servicers—especially [independent mortgage banks],” Fratantoni says. 

Call center and online search data certainly supports his prediction. According to MBA’s latest call volume survey, servicers are seeing more calls than ever. 

Hold times have jumped from two minutes to a whopping 17.5 minutes each, and call abandonment rates are up to 25%—meaning one in four customers eventually drops their call. 

Meanwhile, on the web, searches for terms like “mortgage relief” and “mortgage modification” have reached at all-time high. Even at the height of the housing crisis, relief-related web searches only accounted for only 20% of their current volume.

As Elizabeth Renter, a data analyst with NerdWallet, explains: “When compared with similar terms used during the housing crisis and Great Recession, the search interest for ‘mortgage relief’ in March 2020 is unprecedented.”



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Home Sellers Flee The Market As Coronavirus Concerns Grow


A few months back, experts predicted that 2020 would see a “historic low level” of housing inventory. As March data begins to emerge, it appears those projections may soon ring true. 

According to data from real estate brokerage Redfin, housing supply is rapidly declining in the wake of the COVID-19 outbreak.

In the week ending March 29, more than 28,000 sellers took their homes off the market—a 148% jump over this time last year. In total, 4% of all homes on the market were de-listed, about twice the normal rate. 

According to Adam Weiner, chief growth officer at Redfin, sellers are worried about the exposure that listing their homes might come with.

“If buyers are concerned about buying during the pandemic, sellers are doubly concerned about selling,” Weiner said. “The idea of having anyone outside your immediate family walk through your home would set even the most stalwart homeowner on edge.”

Sellers in Chicago, Los Angeles and Philadelphia were especially prone to pullbacks. In all three, 6% of all active listings were taken off the market last week. Dallas and Denver saw 5% of all listings removed.

Here how de-listings looked across Redfin’s top 12 markets:

To make matters worse, new sellers aren’t coming to the table either. Redfin’s data shows a 33% drop in new listings last week and even double that amount in some markets (Detroit and Philadelphia, namely). 

According to Realtor.com, new sellers are down the most in places like Phoenix (-42%), Milwaukee (-36.2%) and San Diego (-33.4%).

Here’s how Redfin’s Lily Katz sums it up: “The impacts of the coronavirus pandemic are rippling through to nearly every segment of the economy, and the housing market is no exception. The outbreak has driven sudden changes in behavior among homebuyers and sellers in the United States, which now has more reported cases of COVID-19 than any other country in the world.”



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Zillow, Opendoor And Other iBuyers Are Out, But This Homebuying Business Is Still Going Strong


iBuying has all but ground to a halt.

Since the first COVID-19 shelter-in-place order was issued a few weeks ago, Opendoor, Offerpad, Zillow Offers and Redfin Now have all put their online homebuying operations on hold, citing the market’s uncertainty and the difficulty of accurately pricing properties at this time.

While these pullbacks have certainly limited the options for Americans looking to sell a home right now, they haven’t eliminated online selling solutions entirely. In fact, one major player is still actively buying homes.

According to its CEO, HomeVestors—formerly called We Buy Ugly Houses—has transitioned to a virtual process and is continuing to buy homes across the nation. They’re also opening up new franchises to expand business even further.

“Our franchises have successfully bought houses consistently since 1996,” CEO David Hicks says. “When a seller has a need to sell their house, we want to be available.”

That includes “during crisis times as well,” according to Hicks.

Though HomeVestors had previously conducted in-person consultations with sellers, the company is now offering a more digitized experience. Instead of meeting with their local HomeVestors representative, sellers reach out online or via phone. They’ll then set up a virtual meeting with the market rep, and the process goes on from there. 

As unemployment rises in the wake of COVID-19, more and more homeowners may need to use services like HomeVestors to stay financially afloat. According to Hicks, the company is specifically looking for properties that can be improved—older homes, houses that need significant repairs, or ones that need some updating in order to be marketable in today’s market. 

But that’s not a hard-and-fast list, and homeowners are encouraged to set up a virtual consult if selling their house is a priority.

“Nearly half of home sales annually occur between March and June, but the safety measures in place to prevent the spread of COVID-19 and the resulting economic decline are going to have a significant impact on that figure this year,” Hick says. “We hope that we can provide some peace and continuity as we all navigate this uncharted territory.”



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Here’s Why Bank Of America, Ally Mortgage Holders May Not See Promised COVID-19 Relief


The mortgage market is complicated—even for someone who covers it on a regular basis. Nothing’s made that more apparent than the last week.

That was when Bank of America announced its COVID-19 relief options. For its mortgage holders, that meant a three-month deferral plan—basically skipping three months of payments—and adding those onto the back-end of the loan.

Ally Bank announced something similar, only with up to 120 days of deferred payments.

These are both great options for borrowers facing financial hardship due to the coronavirus outbreak. The only problem? Not all Bank of America and Ally customers may be eligible for them (and I heard from plenty of customers who were told exactly that).

To understand why, it’s important to know how the mortgage market works. 

Here’s a shortened version of the story: Lenders issue loans to homebuyers. Once those loans close, they’re often sold—to Fannie Mae and Freddie Mac, namely—to keep the lender liquid. Sometimes, the original lender continues to service the loan, still managing all customer communications, payments, and more, causing even more confusion for the customer.

Therein lies the issue. Because Ally, Bank of America, or the original lender doesn’t own those loans anymore, their specific COVID-19 relief options don’t apply to the borrower either. Instead, mortgage holders can only leverage whatever relief plans their loan’s owner has offered. 

This goes for Fannie Mae and Freddie Mac-owned loans, as well as loans insured by the Federal Housing Administration (FHA). As of now, the GSEs—Fannie and Freddie—are offering forbearance up to 12 months or a 60-day deferral. With forbearance, a homeowner can lower or suspend their payments but will owe the overdue amount in full once the forbearance period ends. With the deferred payments, borrowers would owe the skipped payments at the loan’s maturity or pay-off date or when the property is sold—whichever comes first.

On FHA loans, only forbearance is an option (and only in certain cases). Additionally, the Department of Housing and Urban Development will not foreclose on homeowners for the next 60 days.

If you’re not sure who owns your loan, you can use the Freddie Mac and Fannie Mae lookup tools to see if one of the GSEs lays claim to it. You can also look back to your closing paperwork to see if you have an FHA-insured loan. (If you were charged an upfront mortgage insurance premium, you have one).

In the end though, it might take contacting your servicer (after many hours in the phone queue) to find out who really owns your loan—and what mortgage relief options you’re eligible for during the coronavirus outbreak.



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