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New Forbearance Requests, Re-entries Lead to Overall Increase

Total loans in forbearance during the week ending November 22 increased 6 basis points relative to the prior week—from 5.48% to 5.54%, according to the Mortgage Bankers Association's (MBA) Forbearance and Call Volume Survey published Tuesday.

The MBA estimates 2.8 million homeowners are in forbearance plans.

The increase was across all loan and servicer types, notes MBA's SVP and Chief Economist Mike Fratantoni, adding that even GSE loans, which had previously declined for 24 straight weeks, increased during the latest recorded period.

"For the second week in a row, the share of loans in forbearance has increased, driven by a rise in new forbearance requests and another slowdown in the pace of forbearance exits," Fratantoni said. "Additionally concerning, there was an increase in forbearance re-entries, as borrowers who had previously exited sought relief again. The increase in new forbearance requests may be the result of additional outreach to homeowners who had previously not taken advantage of forbearance opportunities. However, the slowing rate of exits further highlights that borrowers still in forbearance are increasingly challenged by the renewed restrictions on economic activity to contain the surge in COVID-19 cases."

Added Fratantoni, "Recent housing market data remain quite strong and we expect that the market is well-positioned for additional growth next year, but these data show that additional support is likely needed to get through this winter."

By investor type:

  • The share of Ginnie Mae loans in forbearance increased relative to the prior week from 7.73% to 7.83%.
  • The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week from 3.35% to 3.36%.
  • The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 8.48% to 8.63%.
  • More details, from MBA, about its forbearance activity report (which can be found in full, here):
  • 20.34% of total loans in forbearance are in the initial forbearance plan stage, while 77.42% are in a forbearance extension. The remaining 2.24% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.09% to 0.11%.
  • 30.3% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 24.3% resulted in a loan deferral/partial claim.
  • 16.6% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
  • 12.8% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
  • 7.2% resulted in loans paid off through either a refinance or by selling the home.
  • 6.8% resulted in a loan modification.
  • The remaining 2.0% resulted in repayment plans, short sales, deeds-in-lieu, or other reasons.

Due to the importance of borrowers communicating with lenders when seeking forbearance, the MBA also tracks call volumes.

This week's report showed, as a percent of servicing portfolio volume, calls decreased from the previous week from 8.3% to 7.7%; average speed to answer decreased from 2.3 minutes to 2.1 minutes; abandonment rates increased from 5.4% to 5.5%; the average call length increased from 7.8 minutes to 8 minutes.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others.
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