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Forbearance Volume Begins to Plateau

The latest Forbearance and Call Volume Survey from the Mortgage Bankers Association (MBA) has found that as of August 15, 2021, the total number of loans now in forbearance decreased by one basis point from 3.26% of servicers' portfolio volume in the prior week to 3.25%. According to the MBA's, an estimated 1.6 million homeowners remain in forbearance plans nationwide.

Just last week, forbearance volume took a big tumble, dipping 14 basis points of servicers' portfolio volume from 3.40% the prior week to 3.26%.

This week, the share of Fannie Mae and Freddie Mac loans in forbearance decreased three basis points from 1.69% to 1.66%. Ginnie Mae loans in forbearance decreased three basis points from 3.95% to 3.92%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 10 basis points from 7.05% to 7.15%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers increased two basis points from 3.46% to 3.48%, and the percentage of loans in forbearance for depository servicers decreased one basis point from 3.36% to 3.35%.

"The share of loans in forbearance was little changed, as both new requests and exits were at a slower pace compared to the prior week. In fact, exits were at their slowest pace in over a year," said Mike Fratantoni, MBA's SVP and Chief Economist. "There were more new forbearance requests and re-entries for portfolio and PLS loans, leading to a 10-basis-point increase in their share. Portfolio and PLS loans now account for almost 50% of all depository servicer loans in forbearance, and almost 40% of IMB servicer loans in forbearance, which highlights the importance of this investor category."

By stage, 10.0% of total loans in forbearance were in the initial forbearance plan stage, while 82.3% were in a state of forbearance extension, while the remaining 7.7% represented forbearance re-entries.

The slight dip in foreclosures can be found in the number of Americans returning to the workforce, as this week, the U.S. Department of Labor (for the week ending August 14) found the advance figure for seasonally adjusted initial unemployment claims was 348,000, a decrease of 29,000 from the previous week's revised level, marking the lowest level for initial claims since March 14, 2020, when that total stood at 256,000.

The MBA also found that cumulative forbearance exits for the period from June 1, 2020, through August 15, 2021, at the time of forbearance exit:

  • 28.3% resulted in a loan deferral/partial claim.
  • 22.6% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 16.1% represented borrowers who did not make all their monthly payments and exited forbearance without a loss mitigation plan in place yet.
  • 13.1% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
  • 11.1% resulted in a loan modification or trial loan modification.
  • 7.4% resulted in loans paid off through either a refinance or by selling the home.
  • The remaining 1.4% resulted in repayment plans, short sales, deed-in-lieus or other reasons.

The MBA also reported that weekly servicer call center volume declined relative to the prior week, from 7.5% to 7.3%, with the average call length increasing from 7.5 minutes to 7.9 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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