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Forbearance Starts Slow But Overall Numbers Remain High

The total number of loans now in forbearance remained unchanged relative to the prior week at 5.38% of servicers' portfolio volume as of January 24, leaving 2.7 million homeowners in forbearance plans, according to the Mortgage Bankers Association's (MBA) latest Forbearance and Call Volume Survey, which tracks forbearance plans by types of loans and the volume and wait time for homeowners calling lenders to request forbearance.

The MBA's report showed:

  • The share of Fannie Mae and Freddie Mac loans in forbearance down by 3.10% - a 1-basis-point improvement.
  • Ginnie Mae loans in forbearance decreased 10 basis points to 7.51%.
  • The forbearance share for portfolio loans and private-label securities (PLS) increased by 22 basis points to 9.16%.
  • The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 2 basis points to 5.77%
  • The percentage of loans in forbearance for depository servicers increased 1 basis point to 5.37%.

The share of loans in forbearance was unchanged in the prior week, with a gain in the portfolio/PLS loan segment offset by declines in the Ginnie Mae and GSE investor loan categories. When servicers buy out delinquent loans from Ginnie Mae pools, they are reclassified as portfolio loans, which can lead to a decrease in the Ginnie Mae forbearance share and an increase in the portfolio/PLS share," said Mike Fratantoni, MBA's SVP and Chief Economist. "While new forbearance requests dropped slightly, the rate of exits from forbearance was at the slowest pace since MBA began tracking exit data last summer."

Fratantoni added, "Overall, the forbearance numbers have been little changed over the past few months. Homeowners still in forbearance are likely facing ongoing challenges with lost jobs, lost income, and other impacts from the pandemic."

Of the cumulative forbearance exits for the period from June 1, 2020 through January 24, 2021, 28.6% represented borrowers who continued to make their monthly payments during their forbearance period; 25.5% resulted in a loan deferral/partial claim; 15.6% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance; 13.4% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet; 7.5% 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; and the remaining 1.9% resulted in repayment plans, short sales, or deed-in-lieus.

For the MBA's full weekly forbearance findings, visit mba.org.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at [email protected].

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