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Number of GSE Loans in Forbearance Plans Dips Lower

According to the latest Foreclosure Prevention, Refinance and FPM Report from the Federal Housing Finance Agency (FHFA), the government-sponsored enterprises (GSEs) completed 71,932 foreclosure prevention actions in January 2021, bringing the total to 5,660,185 since the start of conservatorship in September 2008. Approximately 43% of these actions were permanent loan modifications.

The total number of loans in forbearance plans continued to trend downward since its peak in May 2020, but remained elevated through January 2021 compared to pre-pandemic levels.

As of January 31, 2021, 771,369 or approximately 2.6% of the GSEs’ single-family conventional book of business were in forbearance plans, down from 804,559 or 2.8% at the end of December 2020. California ranked with the highest number of loans in forbearance plans, with approximately 102,170 homeowners in active forbearance plans, and 73% on the plan for six or more months.

According to the report, initiated forbearance plans decreased 23% from 61,929 in December to 47,866 in January. The total number of loans in forbearance plans also decreased from 804,559 at the end of December 2020 to 771,369 at the end of January 2021, representing approximately 2.6% of the total loans serviced, and 68 percent of the total delinquent loans.

On the refi front, the FHFA reported total refinance volume rose in January 2021 amid historic low mortgage rates through December. In January, 10 refinances were completed through the High LTV Refinance Option, bringing total refinances through the High LTV Refinance Option from the inception of the program to 150. The percentage of cash-out refis decreased to 27% in January from 29% in December, remaining below the levels observed in the previous few years. Mortgage rates increased in January, with the average interest rate on a 30-year fixed rate mortgage (FRM) rising to 2.74% from 2.68% in December.

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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