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Loans in Forbearance Drop for Third Consecutive Week

The Mortgage Bankers Association (MBA) has reported that the total number of loans currently in forbearance decreased by seven basis points from 5.29% of servicers' portfolio volume in the prior week to 5.22% as of February 14, 2021.

According to the MBA, 2.6 million U.S. homeowners are in forbearance plans.

The MBA’s latest Forbearance and Call Volume Survey found that the share of Fannie Mae and Freddie Mac loans in forbearance decreased from 3.01% to 2.97%, a four-basis-point improvement. Ginnie Mae loans in forbearance decreased two basis points, from 7.34% to 7.32%; while the forbearance share for portfolio loans and private-label securities (PLS) decreased by 20 basis points, from 9.14% to 8.94%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 15 basis points to 5.54%, and the percentage of loans in forbearance for depository servicers increased two basis points to 5.28%.

"The share of loans in forbearance has declined for three weeks in a row, with portfolio and PLS loans decreasing the most this week. This decline was due to a sharp increase in borrower exits, particularly for IMB servicers," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Requests for new forbearances dropped to six basis points, matching a survey low."

Of the cumulative forbearance exits for the period from June 1, 2020 through January 24, 2021, 27.9% represented borrowers who continued to make their monthly payments during their forbearance period; 25.8% resulted in a loan deferral/partial claim; 15.4% resulted in reinstatements; 13.8% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet; 7.8% resulted in a loan modification or trial loan modification; and 7.5% resulted in loans paid off through either a refinance or by selling the home. The remaining 1.8% resulted in repayment plans, short sales, deed-in-lieus, or other reasons.

“The housing market is quite strong, with home sales, home construction, and home price data all testifying to this strength,” said Fratantoni. “Policymakers and the mortgage industry have helped enable this during the pandemic by providing millions of homeowners support in the form of forbearance. The decision to extend the allowable duration of forbearance plans should provide for a smoother transition this year as the job market continues to recover."

The study also delved into weekly servicer call center volume, as a percentage of servicing portfolio volume calls increased from the previous week from 9.2% to 9.3%, while the average speed to answer decreased from 3.2 minutes to 2.3 minutes. The average call time to call centers decreased from 8.2 minutes to eight minutes.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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