The number of Americans seeking to temporarily suspend their mortgage payments spiked during the month of March, as the coronavirus crisis accelerated, shuttering businesses and leading a record number of workers to lose their jobs.
Those seeking relief jumped from 0.25% to 2.66% between March 2 and April 1, according to the latest survey by the Mortgage Bankers Association.
The dramatic uptick “highlights the immediate relief consumers are seeking as they navigate the economic hardships brought forth by the mitigation efforts to stop the spread of COVID-19,” Mike Fratantoni, MBA’s senior vice president and chief economist said in a statement about the survey’s findings.
Homeownership is just one aspect of daily life that the federal government is trying to prop up as the nation reels in the face of a pandemic that has led to the deaths of more than 10,000 Americans and brought the U.S. economy to the brink of recession.
The need for mortgage relief appears even more urgent in the wake of a record 6.65 million Americans filing first-time jobless claims last week. Together with the 3.3 million who applied for benefits a week earlier, a staggering 10 million workers sought benefits in a two-week span, surpassing the nearly 9 million who lost jobs from 2008 to 2010 during the Great Recession.
Last month, the Federal Housing Finance Agency said mortgage lenders Fannie Mae and Freddie Mac would offer payment forbearance – the option to suspend mortgage payments – because of hardships related to the COVID-19 crisis. It also said the mortgage giants would suspend foreclosures and evictions of homeowners with a single-family mortgage for at least 60 days.
The Department of Housing and Urban Development also said the Federal Housing Administration would put a 60-day moratorium on foreclosures and evictions of single-family homeowners.
But Fratantoni said that granting mortgage relief could cause hardship to some lenders as well, particularly the smaller institutions that must continue to pay their own investors. As a result, they may need federal relief of their own.
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“It is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers,” he said.
As of April 1, independent servicers who typically lend to veterans and borrowers who have low to moderate incomes said 3.45% of their loans were in forbearance, the largest share within the lending community, according to the MBA.
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