Delinquencies on mortgages in agency MBS surged in April amid financial difficulties prompted by the coronavirus. Loans were performing well before the pandemic. (Includes data chart.)
FHA is sympathetic to the plight of its lenders during the coronavirus crisis but how far will it go on forbearance for loans in progress? No one knows, at least not yet.
Several mortgage borrowers seem to be using the government’s forbearance program as more of an insurance policy, a development that is providing some relief for servicers.
The gap between when prepayment proceeds are received and when the funds must be transferred to agencies provides an opportunity for servicers to use the funds for forbearance-related advance payments.
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