The rate of forbearance on mortgage loans fell to 0.40% in January, a decrease of 7 basis points compared with 0.47% in December, according to the Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey.
As of the end of January about 200,000 homeowners were in forbearance plans, the MBA estimates.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.17%.
Ginnie Mae loans in forbearance decreased by 19 basis points to 0.88%, and the forbearance share for portfolio loans and private-label securities (PLS) remained the same as the prior month at 0.40%.
“While the number of forbearance requests grew in January, the number of forbearance exits outweighed that pick-up, reaching the highest level since June 2022,” says Marina Walsh, CMB, vice president of industry analysis for the MBA, in a statement. “This outcome was somewhat surprising given the recent events in California, but it speaks to recovery in other parts of the country affected by natural disasters and the movement of aged government loans out of forbearance.”
“As the number of borrowers in forbearance dropped this past month, the number of borrowers with permanent loan workouts grew,” Walsh adds. “Today, approximately 6.5 percent of all borrowers – or 3.3 million homeowners – are in a loan workout completed in 2020 or after.”
By reason, 64.1% of borrowers are in forbearance for reasons such as a temporary hardship caused by job loss, death, divorce, or disability. Another 32.9% are in forbearance because of a natural disaster. The remaining 3.0% of borrowers are still in forbearance because of COVID-19.
By stage, 65.1% of total loans in forbearance are in the initial forbearance plan stage, while 18.1% are in a forbearance extension. The remaining 16.8% are forbearance re-entries, including re-entries with extensions.
States with the highest share of loans that were current as a percent of servicing portfolio included Idaho, Washington, Idaho, Oregon, Alaska, and Colorado.
States with the lowest share of loans that were current as a percent of servicing portfolio included Louisiana, Mississippi, Indiana, West Virginia, and Alabama.
Photo: Erik Mclean