Share Of Mortgages In Forbearance Decreases Slightly In August

September 20, 2022 PROGRESS In Lending

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 2 basis points from 0.74% of servicers’ portfolio volume in the prior month to 0.72% as of August 31, 2022. According to MBA’s estimate, 360,000 homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.32%. Ginnie Mae loans in forbearance increased to 1.32%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 8 basis points to 1.26%.

“The overall number of loans in forbearance continues to trickle down, but there was an increase in Ginnie Mae forbearances in August,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “From January 2021 through May 2022, the Ginnie Mae forbearance rate was declining – albeit at a slower pace in 2022 compared to 2021. In June and July this year, the rate stayed flat. Last month, Ginnie Mae new forbearance requests and re-entries outpaced forbearance exits and there was a decline in post-forbearance workout performance among government loans. Despite this activity, the overall performance of the Ginnie Mae portfolio still improved to 94.57 percent current.”

Added Walsh, “There may be pressures on portfolio performance and post-forbearance workout performance in the months ahead – particularly for government loans – if the record-low unemployment rate rises and the personal savings rate decreases amidst high inflation.”

Key findings of MBA’s Loan Monitoring Survey – August 1 to August 31, 2022:

Total loans in forbearance decreased by 2 basis points in August 2022 relative to July 2022: from 0.74% to 0.72%.
By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior month: from 1.26% to 1.32%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.34% to 0.32%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month: from 1.34% to 1.26%.
Loans in forbearance as a share of servicing portfolio volume (#) as of August 31, 2022:
Total: 0.72% (previous month: 0.74%)
Independent Mortgage Banks (IMBs): 0.96% (previous month: 1.00%)
Depositories: 0.52% (previous month: 0.56%)
By stage, 32.1% of total loans in forbearance are in the initial forbearance plan stage, while 54.4% are in a forbearance extension. The remaining 13.5% are forbearance re-entries, including re-entries with extensions.
Of the cumulative forbearance exits for the period from June 1, 2020, through August 31, 2022, at the time of forbearance exit:
29.6% resulted in a loan deferral/partial claim.
18.4% represented borrowers who continued to make their monthly payments during their forbearance period.
17.3% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
15.9% resulted in a loan modification or trial loan modification.
11.0% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
6.6% resulted in loans paid off through either a refinance or by selling the home.
The remaining 1.2% resulted in repayment plans, short sales, deed-in-lieus or other reasons.
Total loans serviced that were current (not delinquent or in foreclosure) as a percent of servicing portfolio volume (#) increased to 95.85% in August 2022 from 95.59% in July 2022 (on a non-seasonally adjusted basis).
The five states with the highest share of loans that were current as a percent of servicing portfolio: Idaho, Colorado, Washington, Utah, and Oregon.
The five states with the lowest share of loans that were current as a percent of servicing portfolio: Mississippi, Louisiana, New York, West Virginia, and Oklahoma.
Total completed loan workouts from 2020 and onward (repayment plans, loan deferrals/partial claims, loan modifications) that were current as a percent of total completed workouts declined for the fifth consecutive month to 78.31% from 78.82% in July.