MBA: 4.1 Million Homeowners Still in Forbearance Plans

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The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey shows that the total number of loans now in forbearance decreased by 21 basis points as of July 5, from 8.39% of servicers’ portfolio volume the week prior to 8.18%.

According to the MBA’s estimate, 4.1 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance dropped for the fifth week in a row, to 6.07%: a 10-basis-point improvement. Ginnie Mae loans in forbearance decreased 116 basis points, to 10.56%.

At the same time, the forbearance share for portfolio loans and private-label securities (PLS) increased by 85 basis points, to 10.93%, as loans in forbearance were bought out of Ginnie Mae pools and into bank portfolios. The percentage of loans in forbearance for depository servicers dropped to 8.8%, while the percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased to 8.1%.

“The share of loans in forbearance continues to decrease, as more workers are brought back from temporary layoffs. However, our survey reveals a notable shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools – predominantly by bank servicers – and moved onto bank balance sheets,” says Mike Fratantoni, MBA’s senior vice president and chief economist.

“As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance. These buyouts enable servicers to stop advancing principal and interest payments, and to work with borrowers in the hope that they can begin paying again before they are re-securitized into Ginnie Mae pools,” he adds.

“Forty-three percent of loans in forbearance are now in an extension following their initial forbearance term, while more than 10 percent of borrowers entered into a deferral plan to exit forbearance – down from 16 percent the week prior,” Fratantoni adds. “For those exiting forbearance over the next several months, we expect to see many of the borrowers with GSE loans to utilize the deferral option.”

Photo: Mike Fratantoni

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