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Forbearance Plan Volume and Exits Slow Their Pace

The latest Forbearance and Call Volume Survey from the Mortgage Bankers Association (MBA) found the total number of loans in forbearance plans nationwide remained the same relative to the prior week at 3.25%. The MBA estimates that 1.6 million homeowners remain in forbearance plans.

"The share of loans in forbearance changed little once again this week, as both new requests and exits remained at a slow pace," said Mike Fratantoni, MBA's SVP and Chief Economist. "We expect a sharp increase in forbearance exits over the next month as many borrowers reach the 18-month mark, and see their forbearance plans end. For those borrowers who have exited in August, the majority either enter deferral plans or obtain modifications."

By stage, 10.2% of total loans in forbearance were in their initial forbearance plan stage, while 81.7% were in a forbearance extension. The remaining 8.1% represented forbearance re-entries.

By investor type, the share of Fannie Mae and Freddie Mac loans in forbearance remained the same relative to the prior week at 1.66%, as did Ginnie Mae loans in forbearance, remaining unchanged at 3.92%. The forbearance share for portfolio loans and private-label securities (PLS) increased three basis points from 7.15% to 7.18%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers increased two basis points to 3.50%, and the percentage of loans in forbearance for depository servicers was unchanged at 3.35%.

However, will more be requesting forbearance re-entries as unemployment numbers took a slight rise upward last week? The U.S. Department of Labor reported that for the week ending August 21, the advance figure for seasonally-adjusted initial claims was 353,000, an increase ofb4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 348,000 to 349,000. The four-week moving average was 366,500, a decrease of 11,500 from the previous week's revised average. Marking the lowest level for this average since March 14, 2020 when it was 225,500.

Of the cumulative forbearance exits for the period from June 1, 2020, through August 22, 2021, at the time of forbearance exit:

  • 28.3% resulted in a loan deferral/partial claim.
  • 22.5% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 16.0% represented borrowers who did not make all of 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.
  • 11.2% 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.
  • The remaining 1.4% resulted in repayment plans, short sales, deed-in-lieus or other reasons.

Servicer call center volume decreased relative to the prior week, from 7.3% to 6.3%, with the average call length increasing slightly from 7.9 minutes to 8.0 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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