Share Of Mortgage Loans In Forbearance Increases To 0.23% In June

July 23, 2024 PROGRESS In Lending

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance increased to 0.23% as of June 30, 2024. According to MBA’s estimate, 115,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.2 million borrowers since March 2020.

The share of Fannie Mae and Freddie Mac loans in forbearance increased 1 basis point to 0.11% in June 2024. Ginnie Mae loans in forbearance increased by 5 basis points to 0.44%, and the forbearance share for portfolio loans and private-label securities (PLS) stayed flat at 0.31%.

“The number of loans in forbearance increased in June for the first time since October of 2022,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Furthermore, the performance of both loan workouts and overall servicing portfolios weakened, particularly for government loans.”

Added Walsh, “There were several factors that impacted homeowners, including the uptick of severe weather events that hit multiple regions of the country as well as early signs of consumer distress that could potentially impact borrowers’ ability to pay their mortgages. Additionally, June’s month-end fell on a Sunday, and the weekend timing typically leads to higher mortgage defaults in any given month.”

Key Findings of MBA’s Loan Monitoring Survey – June 1 to June 30, 2024

Total loans in forbearance increased by 2 basis points in June 2024 relative to May 2024: from 0.21% to 0.23%.
By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior month from 0.39% to 0.44%.
The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior month from 0.10% to 0.11%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance remained the same relative to the prior month at 0.31%.
Loans in forbearance as a share of servicing portfolio volume (#) as of June 30, 2024:
Total: 0.23% (previous month: 0.21%)
Independent Mortgage Banks (IMBs): 0.24% (previous month: 0.22%)
Depositories: 0.26% (previous month: 0.25%)
By reason, 75.9% of borrowers are in forbearance for reasons such as a temporary hardship caused by job loss, death, divorce, or disability. Another 16.2% are in forbearance because of a natural disaster. Only 7.9% of borrowers are still in forbearance because of COVID-19.
By stage, 59.4% of total loans in forbearance are in the initial forbearance plan stage, while 21.4% are in a forbearance extension. The remaining 19.2% are forbearance re-entries, including re-entries with extensions.
Total loans serviced that were current (not delinquent or in foreclosure) as a percent of servicing portfolio volume (#) decreased to 95.65% (on a non-seasonally adjusted basis) in June 2024, down 49 basis points from 96.14% in May 2024.
The performance of servicing portfolios weakened across all states in June.
The five states with the highest share of loans that were current as a percent of servicing portfolio: Washington, Idaho, Oregon, Colorado, and California.
The five states with the lowest share of loans that were current as a percent of servicing portfolio: Louisiana, Mississippi, Indiana, Alabama, 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 73.27% in June 2024, down 251 basis points from 75.78% the prior month. The performance of loan workouts across all product types worsened in June 2024.