As COVID-19 continues to cause havoc across many sectors, FitchRatings says the country's mortgage market is well positioned towithstand forbearance programs.

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Another wave of the coronavirus in the fall, though, couldchange things, it said.

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Johann Juan, senior director of non-bank financial institutionsfor Fitch, told GlobeSt.com that "the takeaway is that borrowersare less likely to walk away from their homes because they havemore skin in the game. Statistics show that less than 10% ofborrowers are under water on their mortgages."

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And, forbearance programs—like the federal CARES Act, or theCoronavirus Aid Relief and Economic Security Act—are allowingmortgage borrowers to spend their money elsewhere. Many are doingso wisely, said Michael Shepherd, director of banks for Fitch.

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"Not paying their mortgage payments gives people liquidity to doother things like pay their bills and their credit cards," Shepherdtold GlobeSt.com. "So far, the performance of credit cards and autoloans have been pretty good."

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According to the Fitch report, "Forbearance programs allowingborrowers to temporarily suspend monthly mortgage payments are notexpected to be a long-term credit negative for the mortgageindustry."

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Brian Knudsen, associate director of non-bank financialinstitutions for Fitch, said that "In terms of forbearance we haveseen the number of loans from programs taper off a bit. But,because of COVID, there are still many customers out there seekingrelief on mortgage payments"

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A second wave of COVID in the fall or later, experts said, couldcause issues for borrowers.

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"A second wave would, potentially put more stress on borrowerswho may not then be able to pay their mortgages," Juan said."Therefore, it will all depend on what the government offers tohelp those in need."

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Juan continued: "A second wave could place a strain on mortgageservice liquidity down the road and that is certainly something wewould be looking at.'

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The Fitch report quoted data several times from Black Knight,Inc., which provides data and analysis to the real estateindustries.

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The latest statistics available from Black Knight, according toFitch, is from July 14. On that date, the report said. "the numberof mortgage loans in active forbearance had fallen for threeconsecutive weeks to 4.1 million, or 7.8% of all active mortgagesand approximately $900 billion in unpaid principal balances."

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Related stories:

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Fitch Issues Mixed Prognosis For CRE Banksin Midst of Pandemic

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Re-Engineering of the Retail Sector Key toLong-Term Success

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Why the Housing Sector Should HoldUp

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Robert Storace

Robert Storace covers legal trends, lawsuits and analysis for the Connecticut Law Tribune. Follow him on Twitter @RobertSCTLaw or reach him at 203-437-5950.