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Mortgage Forbearance Volume Drops to 18-Month Low

The latest Forbearance and Call Volume Survey issued by the Mortgage Bankers Association (MBA) has found that the total number of loans now in forbearance decreased by four basis points from 3.00% of servicers' portfolio volume in the prior week to 2.96%. According to MBA's estimate, approximately 1.5 million homeowners are currently in forbearance plans.

The share of Fannie Mae and Freddie Mac (GSE) loans in forbearance decreased three basis points from 1.47% to 1.44%. Ginnie Mae loans in forbearance increased three basis points from 3.39% to 3.42%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased four basis points from 6.95% to 6.91%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased one basis point relative to the prior week to 3.24%, and the percentage of loans in forbearance for depository servicers decreased four basis points to 3.06%.

"The share of loans in forbearance continued to decrease last week, dropping below 3% for the first time since March 2020," said Mike Fratantoni, MBA's SVP and Chief Economist. "However, there was a slight increase in the forbearance share for Ginnie Mae loans, and this increase was seen for both depository and IMB servicers. New forbearance requests and re-entries continue to run at a higher rate for Ginnie Mae loans, as well as for portfolio and PLS loans, which include many delinquent FHA, VA, and USDA loans that have been bought out of Ginnie Mae pools."

By stage, 12% of total loans in forbearance are in the initial forbearance plan stage, while 79.3% were in a forbearance extension. The remaining 8.7% were defined as forbearance re-entries.

"We have broken through the three percent threshold as predicted—an important milestone,” said Matt Tully, SVP of Agency Affairs and Chief Compliance Officer at Sagent. "However, Ginnie Mae and PLS numbers are on the rise, a potentially troubling trend that shows we are not fully out of the woods yet. On a positive note, the percentage of borrowers exiting without a plan in place is now below 10%. That data signals borrowers are engaging more directly with their servicer on post-accommodation options."

Of the cumulative forbearance exits for the period from June 1, 2020, through September 19, 2021, at the time of forbearance exit:

  • 28.7% resulted in a loan deferral/partial claim.
  • 21.8% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 16.3% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
  • 12.7% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
  • 11.8% 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.

Servicer call centers reported that volume increased relative to the prior week, from 6.3% to 7.9%, with the average call length decreasing slightly from 8.3 minutes to 8.2 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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