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.”