The share of mortgage loans in forbearance in the United States dropped for the fourth straight week, falling to 8.18 percent of all loans for the week ending July, according to a report released Monday by the Mortgage Bankers Association.
There are an estimated 4.1 million homeowners in forbearance plans, which allow borrowers to pause making mortgage payments due to economic hardship caused by the coronavirus pandemic. A week earlier, there had been 4.2 million loans in forbearance – or 8.39 percent.
“The share of loans in forbearance continues to decrease, as more workers are brought back from temporary layoffs,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
Fratantoni said the survey showed a “a notable shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools – predominantly by bank servicers – and moved onto bank balance sheets.” That resulted in a sharp drop in the share of Ginnie Mae loans in forbearance, he said.
The survey found:
- The share of Ginnie Mae loans in forbearance decreased from 11.72 percent to 10.56 percent.
- The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 6.17 percent to 6.07 percent.
- 8.10 percent of mortgages at independent mortgage banks were in forbearance, down from 8.33 percent the week before.
- 8.80 percent of bank-managed mortgages were in forbearance, down from 9.03 percent.
“Forty-three percent of loans in forbearance are now in an extension following their initial forbearance term, while more than 10 percent of borrowers entered into a deferral plan to exit forbearance – down from 16 percent the week prior,”Fratantoni said. “For those exiting forbearance over the next several months, we expect to see many of the borrowers with GSE loans to utilize the deferral option.”