The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey [1] found that the total number of loans now in forbearance decreased by two basis points, dropping from 0.74% of mortgage servicers’ portfolio volume nationwide in July 2022 to 0.72%, as of August 31, 2022. The MBA estimates that approximately 360,000 U.S. homeowners are currently in forbearance plans.
By loan type, the number of Fannie Mae and Freddie Mac loans (GSE) in forbearance also decreased two basis points from 0.34% to 0.32% in August 2022, while Ginnie Mae loans in forbearance increased from 1.26% to 1.32%. The forbearance share for portfolio loans and private-label securities (PLS) declined eight basis points, from 1.34% to 1.26%.
“The overall number of loans in forbearance continues to trickle down, but there was an increase in Ginnie Mae forbearances in August,” said Marina Walsh, CMB, MBA’s VP of Industry Analysis [2]. “From January 2021 through May 2022, the Ginnie Mae forbearance rate was declining–albeit at a slower pace in 2022 compared to 2021. In June and July this year, the rate stayed flat. Last month, Ginnie Mae new forbearance requests and re-entries outpaced forbearance exits, and there was a decline in post-forbearance workout performance among government loans. Despite this activity, the overall performance of the Ginnie Mae portfolio still improved to 94.57% current.”
By stage, 32.1% of total loans in forbearance were in the initial forbearance plan stage, while 54.4% were in a forbearance extension. The remaining 13.5% were forbearance re-entries, including re-entries with extensions.
“There may be pressures on portfolio performance and post-forbearance workout performance in the months ahead–particularly for government loans–if the record-low unemployment rate rises and personal savings decreases amidst high inflation,” added Walsh.
In the week ending September 10, the U.S. Department of Labor (DOL) reported [3] the advance figure for seasonally adjusted initial claims was 213,000, a decrease of 5,000 from the previous week's revised level. The advance seasonally adjusted insured unemployment rate was 1% for the week ending September 3, unchanged from the previous week's unrevised rate.
Of the cumulative forbearance exits for the period from June 1, 2020, through August 31, 2022, at the time of forbearance exit:
- 29.6% resulted in a loan deferral/partial claim.
- 18.4% represented borrowers who continued to make their monthly payments during their forbearance period.
- 17.3% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
- 15.9% resulted in a loan modification or trial loan modification.
- 11.0% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
- 6.6% resulted in loans paid off through either a refinance or by selling the home.
- The remaining 1.2% resulted in repayment plans, short sales, deed-in-lieus or other reasons.
Regionally, the five states with the highest share of loans that were current as a percent of servicing portfolio included:
- Idaho
- Colorado
- Washington
- Utah
- Oregon
The five states with the lowest share of loans that were current as a percent of servicing portfolio included:
- Mississippi
- Louisiana
- New York
- West Virginia
- Oklahoma