Fewer Americans now have agreements with their mortgage servicers to skip their monthly payments.
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Fewer than 4 million homeowners in the US skip their mortgage payments, according to new estimates by the Mortgage Bankers Association released Monday.
The business group reported that only 7.8% of mortgage loans nationwide were in tolerance as of July 12, equivalent to approximately 3.9 million homeowners. It represents the smallest portion of tolerance loans in more than two months.
The percentage of Americans lenient on their home loans has decreased for five consecutive weeks. A record number of Americans applied for leniency when the coronavirus pandemic toppled the country’s economy. A provision of the CARES Act allowed anyone with a federally backed mortgage, including loans backed by Fannie Mae FNMA,
and Freddie Mac FMCC,
to receive tolerance.
As states have lifted coronavirus-related stay-at-home orders, the job market has rebounded, causing fewer Americans to default on their loan payments.
Read more: If you’re skipping your mortgage payments, watch out for this costly mistake
“Almost half of borrowers who remain lenient are now in an extension of the original term, while the rest are on their initial leniency plan,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association, in the report. .
“The pace of new leniency claims remains quite low compared to the onset of the crisis, but we are on the lookout for any increases due to the recovery in COVID-19 cases or the cessation of improved unemployment insurance benefits later this month, “he said.
Pursuant to the CARES Act, mortgage servicers were required to provide up to 12 months of relief from mortgage payments. In many cases, administrators granted indulgences for a few months, giving owners the option to request an extension.
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