Mortgage Loans in Forbearance Decreases, MBA Reports


The Mortgage Bankers Association‘s (MBA) latest Forbearance and Call Volume Survey reveals that the total number of loans now in forbearance decreased by 1 basis point from 3.26% of servicers’ portfolio volume in the prior week to 3.25% as of August 1.

According to MBA’s estimate, 1.6 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 3 basis points to 1.66%. Ginnie Mae loans in forbearance decreased 3 basis points to 3.92%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 10 basis points to 7.15%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers increased 2 basis points to 3.48%, and the percentage of loans in forbearance for depository servicers decreased 1 basis point to 3.35%. 

“The share of loans in forbearance was little changed, as both new requests and exits were at a slower pace compared to the prior week. In fact, exits were at their slowest pace in over a year,” says Mike Fratantoni, MBA’s senior vice president and chief economist. “There were more new forbearance requests and re-entries for portfolio and PLS loans, leading to a 10-basis-point increase in their share. Portfolio and PLS loans now account for almost 50% of all depository servicer loans in forbearance and almost 40% of IMB servicer loans in forbearance, which highlights the importance of this investor category.” 

By stage, 10% of total loans in forbearance are in the initial forbearance plan stage, while 82.3% are in a forbearance extension. The remaining 7.7% are forbearance re-entries. Of the cumulative forbearance exits for the period from June 1, 2020, through August 15, 2021, at the time of forbearance exit 28.3% resulted in a loan deferral/partial claim. Borrowers who continued to make their monthly payments during their forbearance period represented 22.6% while 16.1% did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet. In addition, 13.1% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance, while 11.1% resulted in a loan modification or trial loan modification.

MBA’s latest Forbearance and Call Volume Survey covers the period from August 9 through August 15, 2021. It represents 74% of the first-mortgage servicing market (36.9 million loans).

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Image by Dillon Kydd on Unsplash

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