Share of Mortgage Loans in Forbearance Falls Under 1%

Loans in forbearance fell below 1%, the Mortgage Bankers Association reported Monday.

Loans now in forbearance decreased by 11 basis points to 0.94% of servicers’ portfolio volume as of April 30 from 1.05% the previous week, the monthly MBA Loan Monitoring Survey reported. MBA estimated 470,000 homeowners remain in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased by 6 basis points to 0.43%. Ginnie Mae loans in forbearance decreased by 9 basis points to 1.29%, while the forbearance share for portfolio loans and private-label securities declined by 29 basis points to 2.15%.

“With the number of borrowers in forbearance decreasing to less than half a million, the pace of monthly forbearance exits reached its lowest level since MBA started tracking exits in June 2020,” said Marina Walsh, CMB, MBA Vice President of Industry Analysis. “Servicers are expected to continue making small incremental inroads to the remaining loans in forbearance.”

In addition to improvement in the overall forbearance rate, the percentage of borrowers who were current on their mortgage payments increased to the highest level of 2022, despite potential headwinds such as high inflation and stock market volatility.

“The best indicator of loan performance is overall national employment,” Walsh said. She noted the U.S. unemployment rate remains below 4 percent, “leaving borrowers in a good position to make their monthly mortgage payments.”

Key findings of MBA’s Loan Monitoring Survey – April 1 to April 30

• Total loans in forbearance decreased by 11 basis points in April, from 1.05% to 0.94%.

o By investor type, the share of Ginnie Mae loans in forbearance decreased from 1.38% to 1.29%.

o The share of Fannie Mae and Freddie Mac loans in forbearance decreased from 0.49% to 0.43%.

o The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased from 2.44% to 2.15%.

• Loans in forbearance as a share of servicing portfolio volume as of April 30:

o Total: 0.94% (previous month: 1.05%)

o Independent Mortgage Banks: 1.17% (previous month: 1.29%)

o Depositories: 0.74% (previous month: 0.86%)

• By stage, 28.9% of total loans in forbearance are in the initial forbearance plan stage, while 58.1% are in a forbearance extension. The remaining 13.0% are forbearance re-entries, including re-entries with extensions.

• Of the cumulative forbearance exits for the period from June 1, 2020, through April 30, 2022, at the time of forbearance exit:

o 29.3% resulted in a loan deferral/partial claim.

o 18.8% represented borrowers who continued to make their monthly payments during their forbearance period.

o 17.0% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.

o 15.6% resulted in a loan modification or trial loan modification.

o 11.3% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.

o 6.7% resulted in loans paid off through either a refinance or by selling the home.

o The remaining 1.3% 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 (#) rose to 95.64% in April from 95.47% in March (on a non-seasonally adjusted basis).

o States with the highest share of loans that were current as a percent of servicing portfolio: Idaho, Washington, Colorado, Utah and Oregon.

o States with the lowest share of loans that were current as a percent of servicing portfolio: Louisiana, Mississippi, West Virginia, New York and Oklahoma.

• 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 82.99% last month from 83.67% in March.

The MBA monthly Loan Monitoring Survey (replacing the MBA Weekly Forbearance and Call Volume Survey in November 2021) represents 72% of the first-mortgage servicing market (36.2 million loans).