Forbearances may have finally hit a floor, staying flat in December for a third straight month, according to the Mortgage Bankers Association’s monthly Loan Monitoring Survey.
The data found that the total number of loans in forbearance was 0.70%, the same as the month prior. This totals about 350,000 homeowners.
The GSEs saw improvement, with Fannie and Freddie loans in forbearance down one basis point to 0.31% and Ginnie Mae loans down to 1.45%.
The share for portfolio loans and private-label securities rose by three basis points to 1%, however, canceling out declines.
“For three consecutive months, the forbearance rate has remained flat — an indicator that we may have reached a floor on further improvements,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis.
“New forbearance requests and re-entries continue to trickle in at about the same pace as forbearance exits. The overall performance of servicing portfolios was also flat compared to the previous month, but there was some deterioration in the performance of Ginnie Mae loans.”
Delinquency rates have seen steady improvement over the last year.
Serious delinquencies in particular down three percentage points from August 2020.
“Forbearance remains an option for struggling homeowners and its usage may continue, especially if unemployment increases as expected,” Walsh added.
“MBA is forecasting for the unemployment rate to reach 5.2% in the second half of 2023, up from its current level of 3.5%.”
Fannie Mae continues to expect a modest recession in the coming months but recently said that if the Fed continues to focus on tightening the labor market, a soft landing could be possible.
The tech industry has cut 10,000 jobs in the last 24 days alone. The mortgage industry has seen 17,641 jobs lost since the beginning of last year.
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