Mortgage changes increase for first time in a year, says FHFA

Although the average borrower who has suspended payments due to pandemic hardship most often chooses resume their initial obligations and pay the amounts due later, requests for loan term changes for affordability reasons have now increased for the first time in a year.

There were 11,434 loan modifications for 130,014 deferred payments in the first quarter, up from 9,347 and 185,112 (respectively) in the previous year, the Federal Housing Finance Agency reported on Tuesday. Mods haven’t been this high since Q1 2020, when they totaled 16,773.

This suggests that although loan modifications are still underway at a rate well below normal levels, they are gradually starting to add to the workload of mortgage officers. An assessment process similar to qualifying income required for a new loan is required for modifications, but not for deferrals.

“Deferral takes the borrower back to their existing payment and… it is much easier to execute operationally than the mod, which requires loan collateral,” said Matt Tully, Compliance Officer and Business Manager of the agency at the service technology company. Sagent, in an email.

While mortgage agents who tend to pay borrowers have been able to manage their workload to date using a mix of versatile employees and automationThis is in part because the staff who handle foreclosures have more time due to the government’s temporary bans, Tully noted.

“To handle an influx of postponements and changes, some of our service clients have moved staff who traditionally handled foreclosures – currently cannot do this work due to the moratorium – to focus on working with borrowers. on retention options, ”he said.

When the government lifts lockdown and forbearance bans, maintenance workers may need to consider additional use of technology or hiring. However, they have been reluctant to invest prematurely due to repeated extensions of moratoria and lower payment suspension rates. Payment suspensions, known as forbearance, now account for less than half of home detention actions by the two government agencies overseen by the FHFA, Tully noted. At the time of going to press, the two agencies – which focus on serving low- to moderate-income borrowers – were to end their foreclosure ban at the end of this month, and had a particularly low abstention rate compared to the market as a whole at just over 4%.

“This is all going to be interesting … if the moratorium on foreclosures really expires,” said Richard Koss, director of research at mortgage analysis provider Recursion, in an interview. “That’s when you’ll really know what’s going to happen. “

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