MBA: Share Of Mortgages In Forbearance Decreases

July 14, 2021 PROGRESS In Lending MBA, mortgage forbearance

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 11 basis points from 3.87% of servicers’ portfolio volume in the prior week to 3.76% as of July 4, 2021. According to MBA’s estimate, 1.9 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 8 basis points to 1.91%. Ginnie Mae loans in forbearance decreased 32 basis points to 4.78%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 2 basis points to 7.94%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 13 basis points to 3.87%, and the percentage of loans in forbearance for depository servicers also decreased 13 basis points to 3.98%.

“Forbearance exits increased in the week of the July 4th holiday to the fastest pace since early April,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “New requests stayed very low, resulting in a large drop in the share of loans in forbearance, particularly for Ginnie Mae loans, which also continue to be impacted by buyouts of delinquent loans. These loans are tracked as portfolio loans after a buyout.”

Added Fratantoni, “The mortgage delinquency rate across the entire servicing portfolio declined in June compared to May. However, the delinquency rate slightly increased for homeowners who have completed a workout. Borrowers who are exiting forbearance now are likely to have been in relief for over a year, with almost 60 percent of borrowers in forbearance extensions of longer than 12 months. These borrowers may face more challenges getting back to making regular payments.”

Key findings of MBA’s Forbearance and Call Volume Survey – June 28 to July 4, 2021

Total loans in forbearance decreased by 11 basis points relative to the prior week: from 3.87% to 3.76%.
By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 5.10% to 4.78%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 1.99% to 1.91%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 7.92% to 7.94%.
By stage, 10.8% of total loans in forbearance are in the initial forbearance plan stage, while 82.7% are in a forbearance extension. The remaining 6.5% 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 July 4, 2021:
27.8% resulted in a loan deferral/partial claim.
23.5% represented borrowers who continued to make their monthly payments during their forbearance period.
15.5% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
13.5% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
10.7% resulted in a loan modification or trial loan modification.
7.5% resulted in loans paid off through either a refinance or by selling the home.
The remaining 1.5% resulted in repayment plans, short sales, deed-in-lieus or other reasons.
Weekly servicer call center volume:
As a percent of servicing portfolio volume (#), calls increased relative to the prior week: from 5.9% to 7.3%.
Average speed to answer increased from 1.0 minutes to 1.5 minutes.
Abandonment rates increased from 3.3% to 4.5%.
Average call length increased from 7.8 minutes to 8.0 minutes.
Loans in forbearance as a share of servicing portfolio volume (#) as of July 4, 2021:
Total: 3.76% (previous week: 3.87%)
IMBs: 3.87% (previous week: 4.00%)
Depositories: 3.98% (previous week: 4.11%)