Share of Mortgages In Forbearance Decreases To 3.40%

August 10, 2021 PROGRESS In Lending MBA, mortgage forbearance

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 7 basis points from 3.47% of servicers’ portfolio volume in the prior week to 3.40% as of August 1, 2021. According to MBA’s estimate, 1.7 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 1.74%. Ginnie Mae loans in forbearance decreased 12 basis points to 4.18%, while the forbearance share for portfolio loans and private-label securities (PLS) decreased 7 basis points to 7.37%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 4 basis points to 3.63%, and the percentage of loans in forbearance for depository servicers decreased 10 basis points to 3.49%.

“Forbearance exits increased as August began and new forbearance requests declined, resulting in the largest decrease in the share of loans in forbearance in three weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “1.7 million homeowners remain in forbearance, 13% of whom were current on their payments as of August 1st. Of those who exited forbearance last week, more than 10.5% were current. Forbearance has surely provided both insurance and assurance for many of these homeowners who worried about ongoing hardships, and it is positive to see so many continue to be able to make their payments while in forbearance.”

Added Fratantoni, “Delinquency rates have increased slightly for borrowers who have exited forbearance and began repayment plans, deferral plans, or modifications over the course of the pandemic. However, July’s strong job market report provides evidence of a rebounding economy, which should provide further support for homeowners exiting forbearance in the months ahead.”

Key findings of MBA’s Forbearance and Call Volume Survey – July 26 to August 1, 2021

Total loans in forbearance decreased by 7 basis points relative to the prior week: from 3.47% to 3.40%.
By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 4.30% to 4.18%.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 1.79% to 1.74%.
The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 7.44% to 7.37%.
By stage, 9.7% of total loans in forbearance are in the initial forbearance plan stage, while 82.9% are in a forbearance extension. The remaining 7.4% are forbearance re-entries.
Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.06% to 0.04%.
Of the cumulative forbearance exits for the period from June 1, 2020, through August 1, 2021:
28.1% resulted in a loan deferral/partial claim.
22.9% represented borrowers who continued to make their monthly payments during their forbearance period.
15.7% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
13.3% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
11.0% resulted in a loan modification or trial loan modification.
7.5% resulted in loans paid off through either a refinance or by selling the home.
The remaining 1.5% 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 increased relative to the prior week: from 5.5% to 6.8%.
Average speed to answer increased from 0.8 minutes to 0.9 minutes.
Abandonment rates increased from 3.4% to 3.6%.
Average call length increased from 7.8 minutes to 7.9 minutes.
Loans in forbearance as a share of servicing portfolio volume (#) as of August 1, 2021:
Total: 3.40% (previous week: 3.47%)
IMBs: 3.63% (previous week: 3.67%)
Depositories: 3.49% (previous week: 3.59%)