Fannie, Freddie Loans In Forbearance Drop Below 1%, First Time Since March ’20

Forbearances continued to drop last week, with the total number of loans in protection down to 2.15% of servicers’ portfolio volume, according to the Mortgage Bankers Association’s (MBA) latest survey. The estimated number of homeowners in forbearance plans remains around 1.1 million.

“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 Senior Vice President 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.”

Mid-October saw a slowdown of forbearance exits after a storm of them in the first two weeks of the month. More than 450,000 homeowners exited forbearance plans just in that period, but the torrent slowed to a trickle in the last two weeks.

Black Knight characterized the slowdown as unremarkable, calling it “the same mid-month lull in removal activity that we’ve been reporting on for many months now.”

For Fannie Mae and Freddie Mac loans, forbearances were down three basis points to 0.97%. Ginnie Mae loans fell seven basis points to 2.65%. Portfolio loans and private-label securities shares fell eight basis points, from 5.21% to 5.13%.

Independent mortgage bank servicers saw a drop of six basis points to 2.43%, and the share for depository servicers declined four points to 2.07%.

Here are some more findings from the report:

  •  By stage, 15.6% of total loans in forbearance are in the initial forbearance plan stage, while 74.2% are in a forbearance extension. The remaining 10.2% are forbearance re-entries, including re-entries with extensions.
  • Total weekly forbearance requests as a percentof servicing portfolio volume (#) remained the same relative to the prior week at 0.04%.
  • 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 of 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.
    • The remaining 1.4% resulted in repayment plans, short sales, deed-in-lieus or other reasons