The share of mortgages in COVID-19-related forbearance plans continued to shrink during the week ended Sept. 6, dropping 15 basis points to 7.01%, down from 7.16% the previous week, according to the Mortgage Bankers Association’s (MBA) Forbearance and Call Volume Survey.
Some of the decrease is due in part to workers re-entering the job market and exiting their forbearance plans – the unemployment rate fell to 8.4% as of the end of August, according to the U.S. Bureau of Labor Statistics. However, it is also due to servicers and lenders buying delinquent loans out of pools and transferring them to their books.
As of Sept. 6, roughly 3.5 million homeowners were in forbearance plans, down from 3.6 million the previous week, according to the survey.
The share of Fannie Mae and Freddie Mac loans in forbearance dropped for the 14th week in a row to 4.65% – a 15-basis-point improvement.
Ginnie Mae loans in forbearance decreased 50 basis points to 9.12%, while the forbearance share for portfolio loans and private-label securities (PLS) increased by 28 basis points to 10.71%.
The percentage of loans in forbearance for depository servicers decreased 19 basis points to 7.21%, while the percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 8 basis points to 7.33%.
“The beginning of September brought another drop in the share of loans in forbearance, with declines in both GSE and Ginnie Mae forbearance shares,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “However, at least a portion of the decline in the Ginnie Mae share was due to servicers buying delinquent loans out of pools and placing them on their portfolios. As a result of this transfer, the share of portfolio loans in forbearance increased.”
Incoming requests for forbearance plans increased slightly during the week ended Sept. 6. Total weekly forbearance requests as a percent of servicing portfolio volume increased to 0.11%, up from 0.09%.
“Forbearance requests increased over the week, particularly for Ginnie Mae loans,” Fratantoni says. “With just under 1 million unemployment insurance claims still being filed every week, the lack of additional fiscal support for the unemployed could lead to even higher increases of those needing forbearance.”