Share Of Mortgage Loans In Forbearance Decreases To 0.33% In August

September 19, 2023 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 6 basis points from 0.39% of servicers’ portfolio volume in the prior month to 0.33% as of August 31, 2023. According to MBA’s estimate, 165,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 7.92 million borrowers since March 2020.

In August, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.19%. Ginnie Mae loans in forbearance decreased 15 basis points to 0.65%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 6 basis points to 0.39%.

“The forbearance rate is just 8 basis points shy of where it was at the beginning of March 2020, which indicates that most homeowners have recovered from the pandemic,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “While there was a monthly decline in the performance of post-forbearance workouts in August, overall mortgage servicing portfolios remain resilient. Compared to other credit types with weaker performance, the percentage of home mortgages that are performing is holding steady at a non-seasonally adjusted 96 percent.”

Key Findings of MBA’s Loan Monitoring Survey – August 1 to August 31, 2023

Total loans in forbearance decreased by 6 basis points in August 2023 relative to July 2023: from 0.39% to 0.33%.
By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior month: from 0.80% to 0.65%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.20% to 0.19%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month: from 0.45% to 0.39%.
Loans in forbearance as a share of servicing portfolio volume (#) as of August 31, 2023:
Total: 0.33% (previous month: 0.39%)
Independent Mortgage Banks (IMBs): 0.41% (previous month: 0.48%)
Depositories: 0.27% (previous month: 0.30%)
By reason, 60.4% of borrowers are in forbearance because of COVID-19. Another 7.2% are in forbearance because of a natural disaster. The remaining 32.4% of borrowers are in forbearance for other reasons such as a temporary hardship caused by job loss, death, divorce, disability, etc.
By stage, 39.7% of total loans in forbearance are in the initial forbearance plan stage, while 51.6% are in a forbearance extension. The remaining 8.6% are forbearance re-entries, including re-entries with extensions.
Of the cumulative forbearance exits for the period from July 1, 2020, through August 31, 2023, at the time of forbearance exit:
29.5% resulted in a loan deferral/partial claim.
17.8% represented borrowers who continued to make their monthly payments during their forbearance period.
18.1% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
16.1% resulted in a loan modification or trial loan modification.
10.8% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
6.5% 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 96.09% (on a non-seasonally adjusted basis) in August 2023 from 96.02% in July 2023.
The five states with the highest share of loans that were current as a percent of servicing portfolio: Washington, Idaho, Colorado, Oregon, and California.
The five states with the lowest share of loans that were current as a percent of servicing portfolio: Mississippi, Louisiana, Indiana, New York, and West Virginia.
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 decreased to 73.43% in August from 73.73% the previous month.