Share Of Mortgage Loans In Forbearance Decreases Slightly To 0.22% In January

February 25, 2024 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 1 basis point from 0.23% of servicers’ portfolio volume in the prior month to 0.22% as of January 31, 2024. According to MBA’s estimate, 110,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.1 million borrowers since March 2020.

In January 2024, the share of Fannie Mae and Freddie Mac loans in forbearance declined 2 basis points to 0.13%. Ginnie Mae loans in forbearance remained the same at 0.39%, and the forbearance share for portfolio loans and private-label securities (PLS) increased 1 basis point to 0.28%.

“The combination of a potential economic slowdown in 2024, and indications that consumer debt balances and delinquencies are on the rise[1], could lead to more homeowners struggling to make their mortgage payments and inquire about forbearance and available loan workout options,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Most pandemic-related protocols have sunset, which gives mortgage servicers different rules of engagement when it comes to assisting borrowers through loan forbearance or a loan workout.”

Key Findings of MBA’s Loan Monitoring Survey – January 1 to January 31, 2024

Total loans in forbearance decreased by 1 basis point in January 2024 relative to December 2023: from 0.23% to 0.22%.
By investor type, the share of Ginnie Mae loans in forbearance remained the same relative to the prior month at 0.39%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.15% to 0.13%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior month: from 0.27% to 0.28%.
Loans in forbearance as a share of servicing portfolio volume (#) as of January 31, 2024:
Total: 0.22% (previous month: 0.23%)
Independent Mortgage Banks (IMBs): 0.26% (previous month: 0.27%)
Depositories: 0.22% (previous month: 0.22%)
By reason, 67.7% of borrowers are in forbearance for reasons such as a temporary hardship caused by job loss, death, divorce, or disability; while 19.8% of borrowers are in forbearance because of COVID-19. Another 12.5% are in forbearance because of a natural disaster.
By stage, 54.8% of total loans in forbearance are in the initial forbearance plan stage, while 27.7% are in a forbearance extension. The remaining 17.5% are forbearance re-entries, including re-entries with extensions.
Of the cumulative forbearance exits for the period from July 1, 2020, through January 31, 2024, at the time of forbearance exit:
29.3% resulted in a loan deferral/partial claim.
17.7% represented borrowers who continued to make their monthly payments during their forbearance period.
18.6% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
16.0% resulted in a loan modification or trial loan modification.
10.7% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
6.4% 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 95.67% (on a non-seasonally adjusted basis) in January 2024, up from 95.44% in December 2023 and down from 95.86% one year ago.
The five states with the highest share of loans that were current as a percent of servicing portfolio: Washington, Idaho, Colorado, Oregon, and Utah.
The five states with the lowest share of loans that were current as a percent of servicing portfolio: Louisiana, Mississippi, Indiana, New York, and Illinois.
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 were 74.88% in January 2024, up from 74.39% the prior month and down from 76.03% one year ago.