Forbearances continued to drop last week, though not as dramatically as the week before. The total number of loans in forbearance dropped to 2.21% of servicers’ portfolio volume, down from 2.28% the week before, according to the Mortgage Bankers Association’s (MBA) latest survey. The estimated number of homeowners in forbearance plans remains around 1.1 million.
This week’s drop of seven basis points is a significant cooling compared to the prior week’s drop of 34 basis points. Black Knight reported that forbearances have entered a mid-month slowdown which they said to be unremarkable, mimicking “the same mid-month lull in removal activity that we’ve been reporting on for many months now.”
MBA Senior Vice President and Chief Economist Mike Fratantoni acknowledged the pattern, saying “many servicers process forbearance exits at the beginning of the month, therefore it is not surprising to see the pace of exits slow again mid-month.”
For Fannie Mae and Freddie Mac loans, forbearances were down five basis points to 1.00%. Ginnie Mae loans fell five basis points to 2.72%. Portfolio loans and private-label securities shares fell 13 basis points, from 5.34% to 5.21%.
Independent mortgage bank servicers saw a drop of eight basis points to 2.49%, and the share for depository servicers declined five points to 2.11%.
“The composition of loans in forbearance is evolving. More than 25% of loans in forbearance are now made up of new forbearance requests and re-entries, while many other homeowners who have reached the end of 18-month terms are successfully exiting into deferrals or modifications,” Fratantoni said.
Here are some more findings from the report:
- By stage, 15.3% of total loans in forbearance are in the initial forbearance plan stage, while 74.8% are in a forbearance extension. The remaining 9.9% are forbearance re-entries.
- Total weekly forbearance requests as a percent of 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 17, 2021, at the time of forbearance exit:
- 29.1% resulted in a loan deferral/partial claim.
- 20.7% 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.
- 13.0% resulted in a loan modification or trial loan modification.
- 12.1% 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 1.3% resulted in repayment plans, short sales, deed-in-lieus or other reasons.