Share of Mortgage Loans in Forbearance Decreases by 15 Basis Points

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The Mortgage Bankers Association‘s (MBA) latest Forbearance and Call Volume Survey has revealed that the total number of loans now in forbearance decreased by 15 basis points from 3.23% of servicers’ portfolio volume in the prior week to 3.08% as of September 5, 2021. According to MBA’s estimate, 1.5 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 11 basis points to 1.52%.  Ginnie Mae loans in forbearance decreased 24 basis points to 3.39%, while the forbearance share for portfolio loans and private-label securities (PLS) decreased 25 basis points to 7.27%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 16 basis point to 3.33%, and the percentage of loans in forbearance for depository servicers decreased 18 basis points to 3.15%. 

“The share of loans in forbearance decreased by 15 basis points last week, as forbearance exits jumped to their fastest pace since March. The fast pace of exits outweighed the slight increase in new forbearance requests and re-entries,” says Mike Fratantoni, MBA’s senior vice president and chief economist.

“Servicer call volume jumped last week as summer came to an end and many borrowers reached the end of their forbearance terms,” adds Fratantoni. “We anticipate a similarly fast pace of exits in the weeks ahead, which should lead to increased call volume and a further decline in the forbearance share.”

Relative to the prior week, the total loans in forbearance decreased by 15 basis points from 3.23% to 3.08%. By investor type, the share of Ginnie Mae loans in forbearance decreased from 3.63% to 3.39%. The share of Fannie Mae and Freddie Mac loans in forbearance decreased from 1.63% to 1.52%. The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased from 7.52% to 7.27%.

By stage, 10.7% of total loans in forbearance are in the initial forbearance plan stage, while 81.1% are in a forbearance extension. The remaining 8.2% are forbearance re-entries. Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week from 0.04% to 0.05%.

Of the cumulative forbearance exits for the period from June 1, 2020, through September 5, 2021, at the time of forbearance exit, 28.3% resulted in a loan deferral/partial claim while 22.2% represented borrowers who continued to make their monthly payments during their forbearance period. Borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet represented 16.3%.

In addition, 12.8% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance. Loan modification or trial loan modification were the result for 11.5% while 7.4% resulted in loans paid off through either a refinance or by selling the home. The remaining 1.4% resulted in repayment plans, short sales, deed-in-lieus or other reasons.

Read the full survey findings here.

Image is licensed under CC BY 2.0

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