Share Of Mortgage Loans In Forbearance Decreases

April 6, 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 6 basis points from 4.96% of servicers’ portfolio volume in the prior week to 4.90% as of March 28, 2021. According to MBA’s estimate, 2.5 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased to 2.72% – a 5-basis-point improvement. Ginnie Mae loans in forbearance decreased 5 basis points to 6.78%, while the forbearance share for portfolio loans and private-label securities (PLS) decreased by 10 basis points to 8.80%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 5 basis points to 5.18%, and the percentage of loans in forbearance for depository servicers declined 7 basis points to 5.03%.

“The share of loans in forbearance decreased for the fifth straight week, and new forbearance requests dropped to their lowest level since March 2020. The share of loans in forbearance also decreased for all three investor categories,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “More than 21 percent of borrowers in forbearance extensions have now exceeded the 12-month mark. Of those that exited forbearance in March, more than 21 percent received a modification, indicating that their income had declined and they could not afford their original mortgage payment.”

Fratantoni added, “March was a turning point for the economy, with hiring shifting into a higher gear and the unemployment rate continuing to decline. However, there are still more than 4.2 million people who have been actively looking for work for more than six months. Homeowners who are still facing hardships and need to extend their forbearance term should contact their servicer.”

Key findings of MBA’s Forbearance and Call Volume Survey – March 22 to March 28, 2021

Total loans in forbearance decreased by 6 basis points relative to the prior week: from 4.96% to 4.90%.
By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 6.83% to 6.78%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 2.77% to 2.72%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 8.90% to 8.80%.
By stage, 13.7% of total loans in forbearance are in the initial forbearance plan stage, while 84.1% are in a forbearance extension. The remaining 2.2% are forbearance re-entries.
Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.05% to 0.04%, the lowest level since the week ending March 15, 2020.
Of the cumulative forbearance exits for the period from June 1, 2020, through March 28, 2021:
26.6% resulted in a loan deferral/partial claim.
26.5% represented borrowers who continued to make their monthly payments during their forbearance period.
14.7% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
13.9% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
9.0% resulted in a loan modification or trial loan modification.
7.6% resulted in loans paid off through either a refinance or by selling the home.
The remaining 1.7% 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 decreased from the previous week from 8.9% to 8.1%.
Average speed to answer decreased from 2.7 minutes to 1.7 minutes.
Abandonment rates decreased from 7.0% to 4.1%.
Average call length decreased from 8.3 minutes to 7.9 minutes.
Loans in forbearance as a share of servicing portfolio volume (#) as of March 28, 2021:
Total: 4.90% (previous week: 4.96%)
IMBs: 5.18% (previous week: 5.23%)
Depositories: 5.03% (previous week: 5.10%)