Share of Mortgage Loans In Forbearance Increases To 0.47% In October

November 18, 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 0.47% as of October 31, 2024. According to MBA’s estimate, 235,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.4 million borrowers since March 2020.

The share of Fannie Mae and Freddie Mac loans in forbearance increased 7 basis points to 0.20% in October 2024. Ginnie Mae loans in forbearance increased by 30 basis points to 1.06%, and the forbearance share for portfolio loans and private-label securities (PLS) increased 6 basis points to 0.43%.

“Approximately 65,000 more borrowers are in forbearance compared to one month ago,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “While forbearances are still low compared to the height of the pandemic, the monthly increase in forbearances is the largest since May 2020 and likely driven by the effects of Hurricanes Helene and Milton.”

Added Walsh, “Of those loans in forbearance, 45 percent are related to natural disasters while the remaining 55 percent are primarily related to temporary hardship such as job loss, death, divorce, or disability. Notwithstanding the storms, some borrowers may be experiencing other economic distress. October marks the fifth consecutive month in which the forbearance rate has increased, and the performance of overall servicing portfolios and loan workouts weakened compared to this time one year ago.”

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

Total loans in forbearance increased by 13 basis points in October 2024 relative to September 2024: from 0.34% to 0.47%.
By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior month from 0.76% to 1.06%.
The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior month from 0.13% to 0.20%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior month from 0.37% to 0.43%.
Loans in forbearance as a share of servicing portfolio volume (#) as of October 31, 2024:
Total: 0.47% (previous month: 0.34%)
Independent Mortgage Banks (IMBs): 0.58% (previous month: 0.39%)
Depositories: 0.34% (previous month: 0.30%)
By reason, 51.5% of borrowers are in forbearance for reasons such as a temporary hardship caused by job loss, death, divorce, or disability. Another 45.4% are in forbearance because of a natural disaster. Only 3.1% of borrowers are still in forbearance because of COVID-19.
By stage, 71.6% of total loans in forbearance are in the initial forbearance plan stage, while 15.6% are in a forbearance extension. The remaining 12.8% 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 (#) reached 95.44% in October 2024, down 15 basis points from 95.59% the prior month (on a non-seasonally adjusted basis), and down 36 basis points from 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 California.
The five states with the lowest share of loans that were current as a percent of servicing portfolio: Louisiana, Mississippi, Indiana, West Virginia, and Alabama.
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 68.47% in October 2024, down 29 basis points from 68.76% the prior month and down 384 basis points from one year ago.