MBA: Share of Loans in Forbearance Drops to 5.46%

The Mortgage Bankers Association’s latest Forbearance and Call Volume Survey reported loans now in forbearance decreased to 5.46% of servicers’ portfolio volume as of Jan. 3 compared to 5.46% the prior week. MBA estimates 2.7 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased to 3.19% – a 5-basis-point improvement. Ginnie Mae loans in forbearance decreased 7 basis points to 7.85%, and the forbearance share for portfolio loans and private-label securities decreased by 10 basis points to 8.77%. The percentage of loans in forbearance for independent mortgage bank servicers decreased 9 basis points from the previous week to 5.92%, while the percentage of loans in forbearance for depository servicers decreased 5 basis point to 5.39%.

“The share of loans in forbearance slightly declined for each investor category entering the new year,
remaining within the narrow range observed for the last two months,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The data show that those homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments and fewer exiting forbearance each month. Those borrowers who do exit are also more likely to require a modification to their ongoing repayment plans.”

Fratantoni noted surging COVID-19 cases caused economic activity to stall in December, “with a monthly job loss for the first time since April, and with those jobs mostly concentrated in the leisure and hospitality sector. We expect that this slowdown will prevent any rapid improvement in the forbearance numbers over the next few months.”

Key findings of MBA’s Forbearance and Call Volume Survey – December 28, 2020 – January 3, 2021

• Total loans in forbearance decreased by 7 basis points relative to the prior week: from 5.53% to 5.46%.
o By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 7.92% to 7.85%.
o The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 3.24% to 3.19%.
o The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 8.87% to 8.77%.

• By stage, 18.49% of total loans in forbearance are in the initial forbearance plan stage, while 79.85% are in a forbearance extension. The remaining 1.66% are forbearance re-entries.

• Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week from 0.06% to 0.07%.

• Of the cumulative forbearance exits for the period from June 1, 2020, through January 3:
o 29.1% represented borrowers who continued to make their monthly payments during their forbearance period.
o 25.1% resulted in a loan deferral/partial claim.
o 15.9% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
o 13.3% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
o 7.4% resulted in loans paid off through either a refinance or by selling the home.
o 7.4% resulted in a loan modification or trial loan modification.
o The remaining 1.8% 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 the previous week from 4.7% to 7.2%.
o Average speed to answer increased from 1.1 minutes to 2.7 minutes.
o Abandonment rates increased from 3.7% to 7.0%.
o Average call length increased from 7.7 minutes to 7.8 minutes.

• Loans in forbearance as a share of servicing portfolio volume (#) as of January 3:
o Total: 5.46% (previous week: 5.53%)
o IMBs: 5.92% (previous week: 6.01%)
o Depositories: 5.39% (previous week: 5.44%)

MBA’s latest Forbearance and Call Volume Survey represents 74% of the first-mortgage servicing market (37.1 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 fbsurvey@mba.org.

NOTE: MBA offices will be closed on Monday, January 18, in observance of the Martin Luther King Jr. holiday.
Next week’s release is scheduled for 4:00 p.m. ET on Tuesday, January 19.