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Share of Mortgages in Forbearance Drops

The number of mortgages currently in forbearance declined for the fourth consecutive week, according to new data released by the Mortgage Bankers Association (MBA).

As of July 5, the MBA estimated 4.1 million homeowners are in forbearance plans. Mortgage servicers’ portfolio volume of loans in forbearance reached 8.18%, a 21-basis-point drop from the 8.39% level in the previous week.

The MBA also reported the share of Fannie Mae and Freddie Mac loans in forbearance shrank for the fifth consecutive week, taking a 10-basis-point drop to 6.07%, while Ginnie Mae loans in forbearance evaporated by 116 basis points to 10.56%. More declines were recorded with depository servicers, who had 8.80% of their loans in forbearance, while independent mortgage banks saw their levels drop to 8.10%.

“The share of loans in forbearance continues to decrease, as more workers are brought back from temporary layoffs,” said Mike Fratantoni, MBA’s SVP and Chief Economist.

However, the forbearance percentage in bank portfolio loans and private-label securities took an 85-basis-point upswing from 10.08% to 10.93%. Fratantoni attributed this increase to “a notable shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools–predominantly by bank servicers–and moved onto bank balance sheets. As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance.”

Fratantoni added that as a result of the buyouts, servicers would now be able to “stop advancing

principal and interest payments, and to work with borrowers in the hope that they can begin paying again before they are re-securitized into Ginnie Mae pools.” He stated 43% of loans in forbearance are currently in an extension period following their initial term, while more than 10% of borrowers entered into a deferral plan to exit forbearance, down from 16% one week earlier.

The MBA also highlighted weekly servicer call center volume as of July 5, noting the percentage of calls increased from 6.8% to 7.8%. And while the average speed to answer calls was up from 1.6 minutes to 2.5, abandonment rates increased from 5.0% to 7.3%.

About Author: Phil Hall

Phil Hall is a former United Nations-based reporter for Fairchild Broadcast News, the author of nine books, the host of the award-winning SoundCloud podcast "The Online Movie Show," co-host of the award-winning WAPJ-FM talk show "Nutmeg Chatter" and a writer with credits in The New York Times, New York Daily News, Hartford Courant, Wired, The Hill's Congress Blog and Profit Confidential. His real estate finance writing has been published in the ABA Banking Journal, Secondary Marketing Executive, Servicing Management, MortgageOrb, Progress in Lending, National Mortgage Professional, Mortgage Professional America, Canadian Mortgage Professional, Mortgage Professional News, Mortgage Broker News and HousingWire.
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