Share of Mortgage Loans in Forbearance Drops


The Mortgage Bankers Association‘s (MBA) latest Forbearance and Call Volume Survey shows that the total number of loans in forbearance decreased by 7 basis points from 2.28% of servicers’ portfolio volume in the prior week to 2.21% as of October 17.

According to MBA’s estimate, 1.1 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 1%. Ginnie Mae loans in forbearance decreased 5 basis points to 2.72%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 13 basis points to 5.21%.

The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 8 basis points relative to the prior week to 2.49%, and the percentage of loans in forbearance for depository servicers decreased 5 basis points to 2.11%. The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week from 5.34% to 5.21%.

“Following two weeks of rapid declines, the share of loans in forbearance dropped again, but at a reduced rate,” explains Mike Fratantoni, MBA’s senior vice president and chief economist. “As reported in the past, many servicers process forbearance exits at the beginning of the month, therefore it is not surprising to see the pace of exits slow again mid-month.”

“The composition of loans in forbearance is evolving,” adds Fratantoni. “More than 25 percent of loans in forbearance are now made up of new forbearance requests and re-entries, while many other homeowners who have reached the end of 18-month terms are successfully exiting into deferrals or modifications.”

By stage, 15.3% of total loans in forbearance are in the initial forbearance plan stage, while 74.8% are in a forbearance extension. The remaining 9.9% are forbearance re-entries. Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.04%.

Of the cumulative forbearance exits for the period from June 1, 2020, through October 17, 2021, at the time of forbearance exit, 29.1% resulted in a loan deferral/partial claim, and 20.7% represented borrowers who continued to make their monthly payments during their forbearance period. In addition, 16.7% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet. Loan modification or trial loan modification were the result for 13% while 12.1% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance. Furthermore, 7.1% resulted in loans paid off through either a refinance or by selling the home while the remaining 1.3% resulted in repayment plans, short sales, deeds-in-lieu or other reasons.

View the full report here.

Image by nikcname is licensed under CC BY 2.0

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