MBA: Share of Mortgage Loans in Forbearance Decreases to 0.31% in September

The Mortgage Bankers Association’s monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 2 basis points from 0.33% of servicers’ portfolio volume in the prior month to 0.31% as of September 30, 2023.

According to MBA’s estimate, 155,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8 million borrowers since March 2020.

In September 2023, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.18%. Ginnie Mae loans in forbearance decreased 8 basis points to 0.57%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 4 basis points to 0.35%.

“The number of loans in forbearance dropped in September, but the overall performance of servicing portfolios and loan workouts declined slightly,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “MBA’s baseline forecast has a recession in the first half of 2024. Several factors – including unemployment increases, rising property taxes and insurance, the resumption of student debt payments, and possible natural disasters – may affect loan performance in future months.”

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

• Total loans in forbearance decreased by 2 basis points in September 2023 relative to August 2023: from 0.33% to 0.31%.

By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior month: from 0.65% to 0.57%.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.19% to 0.18%.

The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month: from 0.39% to 0.35%.

• Loans in forbearance as a share of servicing portfolio volume (#) as of September 30, 2023:

Total: 0.31% (previous month: 0.33%)

Independent Mortgage Banks (IMBs): 0.37% (previous month: 0.41%)

Depositories: 0.25% (previous month: 0.27%)

• By reason, 52.0% of borrowers are in forbearance because of COVID-19. Another 10.2% are in forbearance because of a natural disaster. The remaining 37.8% of borrowers are in forbearance for other reasons such as a temporary hardship caused by job loss, death, divorce, disability, etc.
• By stage, 42.7% of total loans in forbearance are in the initial forbearance plan stage, while 48.9% are in a forbearance extension. The remaining 8.4% are forbearance re-entries, including re-entries with extensions.
• Of the cumulative forbearance exits for the period from July 1, 2020, through September 30, 2023, at the time of forbearance exit:

29.4% resulted in a loan deferral/partial claim.

17.8% represented borrowers who continued to make their monthly payments during their forbearance period.
18.2% 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.
6.5% 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 (#) decreased to 95.83% (on a non-seasonally adjusted basis) in September 2023 from 96.09% in August 2023.
  The five states with the highest share of loans that were current as a percent of servicing portfolio: Washington, Colorado, Idaho, Oregon, and California.
  The five states with the lowest share of loans that were current as a percent of servicing portfolio: Louisiana, Mississippi, Indiana, New York, and Ohio.
• 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 72.20% in September from 73.43% the previous month.

MBA’s monthly Loan Monitoring Survey (which replaced MBA’s Weekly Forbearance and Call Volume Survey in November 2021) covers the period from September 1 through September 30, 2023, and represents 65% of the first-mortgage servicing market (32.4 million loans). To subscribe to the full report, go to www.mba.org/loanmonitoring.

NOTES: For more detailed information on performance metrics, including seasonally adjusted delinquency rates by stage (30 days, 60 days, 90+ days), please refer to MBA’s Quarterly National Delinquency Survey at www.mba.org/nds. Third-quarter 2023 results will be released on Thursday, November 9, 2023.

The next publication of the Monthly Loan Monitoring Survey (LMS) will be released on Monday, November 20, 2023, at 4:00 p.m. ET.