Share of Mortgages in Forbearance Increased for Second Straight Week

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The share of mortgage loans in COVID-19-related forbearance plans increased for a second straight week during the week ended Nov. 22, according to the Mortgage Bankers Association’s (MBA) Forbearance and Call Volume Survey.

As of last week, roughly 5.54% of loans in mortgage servicers’ portfolios were in forbearance, up six basis points from 5.48% the previous week.

The MBA estimates that 2.8 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance increased for the first time in 25 weeks to 3.36% – a one-basis-point increase.

Ginnie Mae loans in forbearance increased 10 basis points to 7.83%, and the forbearance share for portfolio loans and private-label securities (PLS) increased by 15 basis points to 8.63%.

The percentage of loans in forbearance for independent mortgage bank (IMB) servicers increased nine basis points from the previous week to 6.03%, and the percentage of loans in forbearance for depository servicers increased three basis points to 5.47%.

“For the second week in a row, the share of loans in forbearance has increased, driven by a rise in new forbearance requests and another slowdown in the pace of forbearance exits,” says  Mike Fratantoni, Senior Vice President and Chief Economist for the MBA, in a statement. “The increase was across all loan and servicer types. Even GSE loans, which had previously declined for 24 straight weeks, saw an increase last week.

“Additionally concerning, there was an increase in forbearance re-entries, as borrowers who had previously exited sought relief again,” Fratantoni says. “The increase in new forbearance requests may be the result of additional outreach to homeowners who had previously not taken advantage of forbearance opportunities. However, the slowing rate of exits to a new survey low further highlights that borrowers still in forbearance are increasingly challenged by the renewed restrictions on economic activity to contain the surge in COVID-19 cases.

“Recent housing market data remain quite strong and we expect that the market is well positioned for additional growth next year, but these data show that additional support is likely needed to get through this winter,” Fratantoni adds.

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