Share of Mortgage Loans in Forbearance Decreases to 3.40%
New forbearance requests fell to a three-week low, the Mortgage Bankers Association reported Monday.
The latest MBA Forbearance and Call Volume Survey reported loans now in forbearance decreased by 7 basis points to 3.47% of servicers’ portfolio volume as of August 1, from 3.47% the prior week. MBA estimates 1.7 million homeowners are in forbearance plans.
The report said the share of Fannie Mae and Freddie Mac loans in forbearance decreased by 5 basis points to 1.74%. Ginnie Mae loans in forbearance decreased by 12 basis points to 4.18%, while the forbearance share for portfolio loans and private-label securities decreased by 7 basis points to 7.37%. The percentage of loans in forbearance for independent mortgage bank servicers decreased by 4 basis points to 3.63%, while the percentage of loans in forbearance for depository servicers decreased by 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 Senior Vice President and Chief Economist. “1.7 million homeowners remain in forbearance, 13% of whom were current on their payments as of August 1. 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.”
Fratantoni noted delinquency rates 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,” he said.
Key findings of MBA’s Forbearance and Call Volume Survey – July 26 – August 1
• Total loans in forbearance decreased by 7 basis points from 3.47% to 3.40%.
o By investor type, the share of Ginnie Mae loans in forbearance decreased from 4.30% to 4.18%.
o The share of Fannie Mae and Freddie Mac loans in forbearance decreased from 1.79% to 1.74%.
o The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased 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 from 0.06% to 0.04%.
• Of the cumulative forbearance exits for the period from June 1, 2020, through August 1, 2021:
o 28.1% resulted in a loan deferral/partial claim.
o 22.9% represented borrowers who continued to make their monthly payments during their forbearance period.
o 15.7% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
o 13.3% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
o 11.0% resulted in a loan modification or trial loan modification.
o 7.5% resulted in loans paid off through either a refinance or by selling the home.
o The remaining 1.5% resulted in repayment plans, short sales, deed-in-lieus or other reasons.
• Weekly servicer call center volume:
o As a percent of servicing portfolio volume (#), calls increased from 5.5% to 6.8%.
o Average speed to answer increased from 0.8 minutes to 0.9 minutes.
o Abandonment rates increased from 3.4% to 3.6%.
o 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:
o Total: 3.40% (previous week: 3.47%)
o IMBs: 3.63% (previous week: 3.67%)
o Depositories: 3.49% (previous week: 3.59%)
MBA’s latest Forbearance and Call Volume Survey represents 74% of the first-mortgage servicing market (36.9 million loans). To subscribe to the full report, go to www.mba.org/fbsurvey.
If you are a mortgage servicer interested in participating in the survey, email firstname.lastname@example.org.