(Bloomberg) -- Almost 6% of U.S. mortgage borrowers have stopped making their payments following the passage of the CARES Act, which allows for easy forbearance.
The share of home loans in forbearance jumped to 5.95% during the week ended April 12, up from 3.74% the previous week, according to a survey from the Mortgage Bankers Association. Only 0.25% of all loans were in forbearance during the week of March 2.
Home loans backed by Ginnie Mae, which are issued to riskier borrowers, again showed the largest weekly growth, with the share in forbearance climbing 2.37 percentage points to 8.26%. However, loans backed by Fannie Mae and Freddie Mac increased almost as fast -- by 2.20 percentage points -- to 4.64%.
Over 22 million Americans have filed for unemployment benefits in the past four weeks with the virus battering the economy. The government is requiring lenders handling payments on taxpayer-backed loans to give borrowers grace periods of as much as six months at a time with no penalties.
“Given that lockdowns and associated job losses will continue in the coming weeks, forbearance inquiries will likely rise again as we approach May payment due dates,” Mike Fratantoni, MBA's chief economist, said in a statement.
On Friday, FHN Financial analysts wrote that “it is very difficult to estimate how many borrowers will request forbearance, how long borrowers will stay in forbearance, or how many borrowers will cure.”
Borrowers with relatively low credit scores, many of whom live paycheck to paycheck, are most likely to seek relief. Over the past two years, Ginnie Mae has guaranteed $583 billion of 30-year mortgages with FICO scores below 715, according to data compiled by Bloomberg.
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