The share of mortgages in forbearance has fallen to just a sliver of what it was post-pandemic, in 2020 and 2021, the most recent Loan Monitoring Survey from the Mortgage Bankers Association reveals.
As of December 31, the total number of loans in forbearance decreased by 3 basis points from 0.26% of servicers’ portfolio volume compared with November.
Only about 115,000 homeowners are currently in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.1 million borrowers since March 2020.
In December, the share of Fannie Mae and Freddie Mac loans in forbearance declined 1 basis point to 0.15%. Ginnie Mae loans in forbearance decreased 8 basis points to 0.39%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 3 basis points to 0.27%.
“Forbearance as a loss mitigation option is diminishing,” says Marina Walsh, vice president of industry analysis for the MBA, in a statement. “While forbearance is a powerful tool for delinquency surges resulting from natural disasters or major disruptions such as a pandemic, today’s borrowers are not experiencing widespread financial distress. The overall performance of servicing portfolios – particularly government loans – declined in December. Factors such as seasonality, a changing labor market, resumption of student loan payments, and the rise in balances on other forms of consumer debt are likely at play.”
Walsh also noted that MBA anticipates that the unemployment rate, a leading indicator of mortgage performance, is expected to increase gradually to 4.5% by the end of 2024 from 3.7% at year-end 2023.
Photo: Mohamed Nohassi
