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GSE Forbearance Exits Reach Slowest Pace Since August

As an estimated 1.1 million homeowners remain in forbearance plans, the Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey shows that, as of October 24, 2021, the total number of loans in forbearance decreased by six basis points from 2.21% of servicers' portfolio volume the prior week to 2.15%.

In terms of loan type:

  • GSE loans (Fannie Mae and Freddie Mac) in forbearance decreased three basis points from 1.00% to 0.97%
  • Ginnie Mae loans in forbearance decreased seven basis points from 2.72% to 2.65%
  • Private-label securities (PLS) declined eight basis points from 5.21% to 5.13%
  • Independent mortgage bank (IMB) servicers saw their volume decline six basis points relative to the prior week, from 2.49% to 2.43%
  • Depository servicers saw their share decrease four basis points from 2.11% to 2.07%

By stage, 15.6% of loans in forbearance were in the initial forbearance plan stage, while 74.2% were in a forbearance extension. The remaining 10.2% represented forbearance re-entries, including re-entries with extensions.

"For the first time since March 2020, the share of Fannie Mae and Freddie Mac loans in forbearance dropped below 1%. A small decline for this investor category was matched by similarly small declines for Ginnie Mae and portfolio/PLS loans," said Mike Fratantoni, MBA's SVP and Chief Economist. "Forbearance exits slowed at the end of October to the slowest pace since late August. With so many borrowers having reached the end of their 18-month forbearance term, we expect a steady pace of exits in November."

Of the cumulative forbearance exits for the period from June 1, 2020, through October 24, 2021, at the time of forbearance exit:

  • 29.1% resulted in a loan deferral/partial claim
  • 20.6% represented borrowers who continued to make their monthly payments during their forbearance period
  • 16.7% 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 a loan modification or trial loan modification
  • 12.0% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance
  • 7.1% resulted in loans paid off through either a refinance or by selling the home
  • 1.4% resulted in repayment plans, short sales, deed-in-lieus or other reasons

As the nation’s economic landscape improves, the U.S. workforce is seeing gains, as last week, the U.S. Department of Labor reported the advance figure for seasonally-adjusted initial unemployment claims was 281,000, a decrease of 10,000 from the previous week's level, and the lowest level for initial claims since March 14, 2020, when it was at 256,000.

In terms of weekly servicer call center volume, the MBA reports that calls related to forbearances decreased relative to the prior week, from 7.7% to 5.9%, with the average speed to answer decreasing from 2.1 minutes to 1.5 minutes, and the average call length dropping slightly from 7.9 minutes to 7.8 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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