The government's coronavirus mortgage bailout has now swelled to nearly 3 million borrowers, and the expectation is that the numbers will multiply. Mortgage servicers are struggling to make up those payments to bondholders and are begging for a bailout.
More than 2.9 million homeowners have taken advantage of the mortgage forbearance program for government-backed loans, part of the coronavirus CARES Act relief package.
The program allows borrowers to delay their monthly payments for a year. Those payments are then tacked on to the end of the loan, or paid back over time in a mortgage modification. Borrowers must tell their mortgage servicers that they have had financial hardship due to the coronavirus pandemic, but they do not have to provide any proof.
Even if borrowers don't make their monthly payments, those who collect the payments still have to advance the principal and interest amounts each month to bondholders. At the current level of forbearance, mortgage servicers would need to advance $2.3 billion per month to holders of government-backed mortgage securities on Covid-19-related forbearances. Another $1.1 billion in funds will be lost each month by those with portfolio-held or privately securitized mortgages .
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