Forbearance data might not be as daunting as it looks at first blush. That is, according to an article by Bloomberg.com, which points to the Mortgage Bankers Association (MBA) data showing that, as of September 6, as many as 25% of all homeowners in forbearance plans have continued to make their monthly mortgage payments. That means that of 3.4 million households in forbearance at that point, about 820,000 had not missed a payment.
Mike Fratantoni, MBA’s SVP and Chief Economist, in a Bloomberg interview, called this "one of the most surprising aspects of this entire episode."
He added that he had seen that share drop over the months as borrowers exited forbearance.
What does this indicate? Bloomberg author Christopher Maloney (a market strategist and former portfolio manager) suggests it is “strategic forbearance, with many homeowners taking on the option, just in case."
He broke it down: "Of the Ginnie Mae borrowers in forbearance, 23.7% are current. For conventional borrowers it’s 20.6%, and for those sitting on banks’ balance sheets it’s 28.6%," Maloney pointed out. "This is important, as mortgages which continue to pay are not going to be bought out by servicers, and for mortgage investors buyouts are just prepayments by another name. With loans bought out from pools at par, this can weigh on portfolio performance, especially when much of the mortgage universe is trading at a premium."
He explains how changes to forbearance data can come as a result of servicers moving loans among categories. For example:
"While the percentage of the overall mortgage universe in forbearance has been declining of late, when it is due to servicers buying out those loans from the pools it can be a case of merely moving it from one category to another," he wrote. "... the percentage of the Ginnie Mae universe in forbearance has dropped to its current 9.16% from a high of 11.83% on June 21. While on the face of it this is good news, the drop was boosted by bank servicers buying out loans. This moved them to the 'other' category—which has increased over that time frame—from the 'Ginnie Mae' category."
To Bloomberg, Fratantoni stressed that jobs are the most significant factor when it comes to getting through forbearance.
“So long as the job market keeps improving and the housing market is in solid shape there is a good potential for this to keep improving,” Fratantoni said.