Walsh believes the disproportionate struggles of FHA borrowers explain why IMBs carry a greater percentage of forbearance than big banks, from 5.94% to 5.43%. IMBs, Walsh said, have a larger Ginnie Mae portfolio that includes FHA, RHS, and VA loans, as opposed to conventional loans. She says a higher abstention rate from IMB maintenance workers doesn’t mean they’re doing a “worse job,” but rather reflects a different portfolio composition.
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Despite a somewhat pessimistic outlook on the state of borrowers remaining in forbearance, Walsh says there is no reason for the housing industry at large to panic. She pointed out that 2020 is not 2008 and that the underlying strength of the housing market means that even struggling borrowers could be saved by the growing equity in their homes and huge demand from home buyers.
“Distressed borrowers are going to be helped by the potential accumulation of equity,” Walsh said. “There could be equity in their homes, combined with an appreciation in home prices, because we’re in this pretty big housing inventory crisis. There is a lot of demand for mortgages because the interest rates are still very low. If you look at our MBA forecast for how things will evolve, we expect buy-backs to continue to increase over the next three years.
“Are all situations perfect? No. But troubled borrowers are potentially better off in 2020 than they were in 2010. ”