More US homeowners skip mortgage payments with jobs vanishing

[NEW YORK] More and more US homeowners aren't paying their mortgages.

Nearly three million US home loans are in forbearance plans that allow delayed payments without penalty, according to a report by Black Knight Inc.

The homeowners skipping payments because of lost jobs or income represent 5.5 per cent of borrowers with US$651 billion in unpaid principal. They break down to 4.9 per cent of loans backed by Fannie Mae and Freddie Mac and 7.6 per cent of loans extended to borrowers through the Veterans Administration and Federal Housing Administration.

Mortgage servicers, who are facing a potential liquidity crisis, would need to advance US$2.3 billion a month to make good on payments due to investors in government-guaranteed mortgage-backed securities. Another US$1.1 billion in lost funds is looming on loans held privately or by non-government-backed MBS.

The federal stimulus package enacted to help stem the economic fallout from the coronavirus outbreak allows borrowers to delay mortgage payments for as long as six months initially, if they've lost income because of the pandemic.

More than 20 million Americans have filed for unemployment in the last four weeks.

BLOOMBERG