Share of Mortgage Loans In Forbearance Decreases To 4.22%

May 19, 2021 PROGRESS In Lending MBA, mortgage loan 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 14 basis points from 4.36% of servicers’ portfolio volume in the prior week to 4.22% as of May 9, 2021. According to MBA’s estimate, 2.1 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 8 basis points to 2.24%. Ginnie Mae loans in forbearance decreased 21 basis points to 5.61%, while the forbearance share for portfolio loans and private-label securities (PLS) decreased by 29 basis points to 8.26%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 16 basis points to 4.42%, and the percentage of loans in forbearance for depository servicers declined 12 basis points to 4.35%.

“More homeowners exited forbearance in the first full week of May, leading to a 14-basis-point decrease in the forbearance share – the 11th straight week of declines. The rate of new requests dropped to 4 basis points, which is the lowest level since last March,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Of those in forbearance extensions, more than half have been in forbearance for more than 12 months.”

Added Fratantoni, “The opening of the economy, as the successful vaccination effort continues, should lead to further reductions in the forbearance share. However, many homeowners continue to struggle. Borrowers who are reaching the end of their forbearance term should reach out to their servicer to review their options.”

Key findings of MBA’s Forbearance and Call Volume Survey – May 3 to May 9, 2021

Total loans in forbearance decreased by 14 basis points relative to the prior week: from 4.36% to 4.22%.
By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 5.82% to 5.61%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 2.32% to 2.24%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 8.55% to 8.26%.
By stage, 11.9% of total loans in forbearance are in the initial forbearance plan stage, while 83.0% are in a forbearance extension. The remaining 5.1% 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%.
Of the cumulative forbearance exits for the period from June 1, 2020, through May 9, 2021:
27.1% resulted in a loan deferral/partial claim.
24.9% represented borrowers who continued to make their monthly payments during their forbearance period.
15.0% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
14.2% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
9.8% resulted in a loan modification or trial loan modification.
7.4% resulted in loans paid off through either a refinance or by selling the home.
The remaining 1.6% 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 from the previous week from 7.8% to 8.0%.
Average speed to answer remained the same relative to the prior week at 1.8 minutes.
Abandonment rates increased from 4.4% to 6.1%.
Average call length decreased from 8.1 minutes to 7.9 minutes.
Loans in forbearance as a share of servicing portfolio volume (#) as of May 9, 2021:
Total: 4.22% (previous week: 4.36%)
IMBs: 4.42% (previous week: 4.58%)
Depositories: 4.35% (previous week: 4.47%)