Share Of Mortgages In Forbearance Decreases To 0.74% In July

August 16, 2022 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 7 basis points from 0.81% of servicers’ portfolio volume in the prior month to 0.74% as of July 31, 2022. According to MBA’s estimate, 370,000 homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.34%. Ginnie Mae loans in forbearance remained the same relative to the previous month at 1.26%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 34 basis points to 1.34%.

“July continued the ongoing trend in recent months of most of the forbearance exits coming from borrowers with portfolio loans and private label security loans,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “There has been very little change in the forbearance rate for Fannie Mae, Freddie Mac, and Ginnie Mae loans during the past three months, perhaps indicating that we have reached a floor, with loans entering forbearance about equal to loans exiting forbearance for these loan types.”

Key findings of MBA’s Loan Monitoring Survey – July 1 to July 31, 2022:

Total loans in forbearance decreased by 7 basis points in July 2022 relative to June 2022: from 0.81% to 0.74%.
By investor type, the share of Ginnie Mae loans in forbearance remained the same relative to the prior month at 1.26%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.35% to 0.34%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month: from 1.68% to 1.34%.
Loans in forbearance as a share of servicing portfolio volume (#) as of July 31, 2022:
Total: 0.74% (previous month: 0.81%)
Independent Mortgage Banks (IMBs): 1.00% (previous month: 1.03%)
Depositories: 0.56% (previous month: 0.62%)
By stage, 30.5% of total loans in forbearance are in the initial forbearance plan stage, while 56.1% are in a forbearance extension. The remaining 13.4% are forbearance re-entries, including re-entries with extensions.
Of the cumulative forbearance exits for the period from June 1, 2020, through July 31, 2022, at the time of forbearance exit:
29.5% resulted in a loan deferral/partial claim.
18.5% represented borrowers who continued to make their monthly payments during their forbearance period.
17.2% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
15.8% resulted in a loan modification or trial loan modification.
11.1% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
6.7% 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 (#) dropped to 95.59% in July 2022 from 95.71% in June 2022 (on a non-seasonally adjusted basis).
The five states with the highest share of loans that were current as a percent of servicing portfolio: Idaho, Washington, Colorado, Utah, and Oregon.
The five states with the lowest share of loans that were current as a percent of servicing portfolio: Mississippi, Louisiana, New York, West Virginia, and Indiana.
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 declined to 78.82% last month from 81.34% in June.