MBA Says Relief Will Help Lenders, Homeowners, Renters

The Mortgage Brokers Association praised Congress’ passage of relief Tuesday, after reporting loan forbearances remain above 5%.

In a separate report Monday, the MBA’s revised estimates showed that refinances continue to exceed expectations, raising total originations for both the third and fourth quarters above the $1 trillion mark for the first time in 13 years.

MBA President/CEO Bob Broeksmit praised Congress for passing relief that he said will help lenders, homeowners and tenants.

Those measures include rental assistance for tenants, enhancements to the Paycheck Protection Program to help the hospitality sector, continued Troubled Debt Restructuring relief for all financial institutions, and continuation of the Term Asset-Backed Securities Loan Facility to increase the availability of consumer credit.

“Additionally, we welcome the extension of unemployment insurance and direct assistance for the millions of people who have been affected by the COVID-19 pandemic,” Broeksmit said.

The MBA reported that the total number of loans in forbearance was 5.49% of servicers’ portfolio volume as of Dec. 13, up from 5.48% a week earlier.

The MBA estimated 2.7 million homeowners are in forbearance plans. Nearly 19% of total loans in forbearance are in the initial forbearance plan stage, while 79% are in a forbearance extension. The remainder are forbearance re-entries.

MBA Chief Economist Mike Fratantoni said the share of loans in forbearance has stayed fairly level since early November, often with small decreases in the government-sponsored enterprise loan share and increases for Ginnie Mae loans.

“That was the case last week,” Fratantoni said. “Additionally, forbearance requests from Ginnie Mae borrowers reached the highest level since the week ending June 14.”

“Additional restrictions on businesses and rising COVID-19 cases are causing a renewed increase in layoffs and other signs of slowing economic activity. These troubling trends will likely result in more homeowners seeking relief,” he said.

The Washington, D.C., trade association’s Mortgage Finance Forecast released Monday showed refinance originations were revised upwards 19.2% to $658 billion for the three months ending Sept. 30. The revised amount is 138.4% higher than in 2019’s third quarter.

The MBA raised its refinance forecasts substantially through 2021’s second quarter, while making only minor adjustments to already-strong purchase originations. No revisions for originations were made past the June 2021 from its previous forecast released Nov. 16.

The adjustments pushed total originations up 11.9% to $1.08 trillion for the third quarter and 7.4% to $1.01 trillion for the fourth quarter.

If those numbers hold, they represent the highest total originations since reaching $1.12 trillion in the third quarter of 2003 — the end of a 12-month surge in refinances.

Refinance originations were the highest since reaching $843 billion in 2003’s second quarter followed by $815 billion in 2003’s third quarter.

Purchase originations for the third quarter of 2020 were raised 2% to $418 billion. The revised amount is 11.5% higher than a year earlier and represents the highest three-month volume since reaching $434 billion in 2003’s third quarter.

With the revisions, total originations climbed at a steeper rate in the second half, but will fall at a steeper rate starting in the second quarter of 2021. Total originations in the third quarter of 2020 were 65.3% higher than in 2019’s third quarter.

They are forecast to rise 44.5% in the fourth quarter and 48.3% to $835 billion in the first quarter before falling 24.1% to $704 billion in the second quarter.

Purchase originations for the first quarter were lowered 7% to $330 billion, which is still 28.4% higher than a year earlier.

In the mortgage environment, the latest forecast showed the MBA is expecting slightly lower interest rates and higher home sales in the fourth quarter of 2020 and first quarter of 2021, compared with its Nov. 16 forecast.

Existing homes sales for the fourth quarter was revised upwards 4.6% to a seasonally adjusted annual rate (SAAR) of 6.7 million houses, up 23.8% from a year earlier. It raised forecasts for new home sales over the next two years by 2.5% to 4.1%.

Single-family housing starts for the first quarter were raised 3.8% to 1.2 million SAAR, up 19% from a year earlier.