Share of Mortgages In Forbearance Decreases To 0.44% In June

July 21, 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 5 basis points to 0.44% of servicers’ portfolio volume in the prior month from 0.49% as of June 30, 2023. According to MBA’s estimate, 220,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 7.9 million borrowers since March 2020.

In June 2023, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.21%. Ginnie Mae loans in forbearance decreased 13 basis points to 0.93%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 6 basis points to 0.52%.

“Mortgage forbearance has declined because most homeowners have maintained or improved their financial health,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Recent reporting by the U.S. Bureau of Labor Statistics shows continued job growth in June, and a 3.6 percent unemployment rate. The employment situation tracks with homeowners’ ability to make mortgage payments.”

Added Walsh, “MBA forecasts a slowing in the economy that could give rise to higher unemployment and mortgage delinquencies later in the year. Forbearance remains a viable loss mitigation option for homeowners who may struggle under more challenging economic conditions.”

Key Findings of MBA’s Loan Monitoring Survey – June 1 to June 30, 2023

Total loans in forbearance decreased by 5 basis points in June 2023 relative to May 2023: from 0.49% to 0.44%.
By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior month: from 1.06% to 0.93%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.23% to 0.21%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month: from 0.58% to 0.52%.
Loans in forbearance as a share of servicing portfolio volume (#) as of June 30, 2023:
Total: 0.44% (previous month: 0.49%)
Independent Mortgage Banks (IMBs): 0.56% (previous month: 0.64%)
Depositories: 0.32% (previous month: 0.34%)
By reason, 78.3% of borrowers are in forbearance because of COVID-19-related impacts. Another 6.1% are in forbearance because of a natural disaster. The remaining 15.6% of borrowers are in forbearance for other reasons, such as a temporary hardship caused by job loss, death, divorce, disability, etc.
By stage, 34.9% of total loans in forbearance are in the initial forbearance plan stage, while 54.5% are in a forbearance extension. The remaining 12.6% are forbearance re-entries, including re-entries with extensions.
Of the cumulative forbearance exits for the period from June 1, 2020, through June 30, 2023, at the time of forbearance exit:
29.5% resulted in a loan deferral/partial claim.
17.9% represented borrowers who continued to make their monthly payments during their forbearance period.
17.9% 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.
6.6% 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 (#) remained flat at 96.12% (on a non-seasonally adjusted basis) in June 2023 compared to May 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, New York, Indiana, 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 74.70% in June from 74.93% the previous month.