Analysts are warning that the U.S. housing market is perched above a precipice, with nearly 500,000 new loans going into forbearance in just one week. Those are the numbers of Black Knight, a mortgage data company, which represented a 9 percent hike in the number of applicants for relief under the CARES Act forbearance plan. That brings the total number of mortgage borrowers who can’t make their payments on time to 3.4 million. Even though there are federal relief programs trying to help out, mortgage servicers are now under pressure, as the unpaid principal on mortgage loans is set to go over the $1 trillion mark. But with millions of workers unable to work because of lockdown orders, there appears nothing they can do, and potentially nothing the government can do to help get them back on their feet. The government sponsored mortgage guarantee banks Fannie Mae and Freddie Mac are allowing a full year on mortgage payments, but the ripple effects from this leeway could sink other players in the market. Mortgage servicers may not be collecting monthly payments from the borrowers, but they’re still being forced by the federal government to pay their investors for four months worth of payments that the borrowers aren’t being forced to pay.
