Share Of Mortgage Loans In Forbearance Increases Slightly

November 24, 2020 PROGRESS In Lending

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 5.47% of servicers’ portfolio volume in the prior week to 5.48% as of November 15, 2020. According to MBA’s estimate, 2.7 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance dropped for the 24th week in a row to 3.35% – a 1 basis-point improvement. Ginnie Mae loans in forbearance increased 3 basis points to 7.73%, and the forbearance share for portfolio loans and private-label securities (PLS) increased by 10 basis points to 8.48%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers remained the same as the previous week at 5.94%, and the percentage of loans in forbearance for depository servicers increased 1 basis point from the previous week to 5.44%.

“A marked slowdown in forbearance exits, as well as a slight rise in the share of Ginnie Mae, portfolio, and PLS loans in forbearance, led to an overall increase for the first time since early June. The decline in exits in the prior week follows a flurry of them last month, when many borrowers reached the six-month point in their forbearance terms,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The share of GSE loans in forbearance continued its downward trend and have now declined every week for six straight months.”

Added Fratantoni, “Incoming housing market data remain quite strong, with existing-home sales in October reaching their fastest pace since 2005, and the inventory of homes on the market hitting a record low. However, renewed weakness in the latest job market data indicate that many homeowners are continuing to experience severe hardships due to the pandemic and still need the support that forbearance provides.”

Key findings of MBA’s Forbearance and Call Volume Survey – November 9 to November 15, 2020

Total loans in forbearance increased 1 basis point relative to the prior week: from 5.47% to 5.48%.
By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 7.70% to 7.73%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 3.36% to 3.35%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 8.38% to 8.48%.
By stage, 21.32% of total loans in forbearance are in the initial forbearance plan stage, while 76.76% are in a forbearance extension. The remaining 1.92% are forbearance re-entries.
Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.08% to 0.09%.
Of the cumulative forbearance exits for the period from June 1 through November 15, 2020:
30.5% represented borrowers who continued to make their monthly payments during their forbearance period.
24.0% resulted in a loan deferral/partial claim.
16.8% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
12.9% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
7.1% resulted in loans paid off through either a refinance or by selling the home.
6.8% resulted in a loan modification.
The remaining 1.9% 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 remained the same as the previous week at 8.3%.
Average speed to answer decreased from 2.4 minutes to 2.3 minutes.
Abandonment rates decreased from 6.3% to 5.4%.
Average call length decreased from 8.0 minutes to 7.8 minutes.
Loans in forbearance as a share of servicing portfolio volume (#) as of November 15, 2020:
Total: 5.48% (previous week: 5.47%)
IMBs: 5.94% (previous week: 5.94%)
Depositories: 5.44% (previous week: 5.43%)