MBA: Forbearances Below 3%, Continue Trend

Forbearances fell to just2.89% of servicers’ portfolio volume last week, down from 2.96% the week before, according to the Mortgage Bankers Association’s (MBA) latest survey. It’s just the second time they’ve fallen below 3% since March 2020. The estimated number of homeowners in forbearance plans is around 1.4 million.

The decline is part of a trend that’s continued even as government-funded forbearance relief plans have expired.

For Fannie Mae and Freddie Mac loans, forbearances were down six basis points to 1.38%. Ginnie Mae loans fell seven basis points to 3.35%. Portfolio loans and private-label securities shares fell fourteen basis points, from 6.91% to 6.77%.

Independent mortgage bank servicers saw a drop of five basis points to 3.19%, and the share for depository servicers declined thirteen points to 2.93%.

“The share of loans in forbearance declined at a faster rate last week, dropping by seven basis points, as exits increased and new requests and re-entries declined,” MBA Senior Vice President and Chief Economist Mike Fratantoni said.

“While 1.4 million homeowners remained in forbearance as of September 26, this number is expected to drop sharply over the next few weeks as many are reaching the 18-month expiration point of their forbearance terms. Most borrowers exiting forbearance through a workout are opting for a deferral plan, which allows them to resume their original payment, while moving the forborne amount to the end of the loan.”  

“Although call volume dropped in the last week of September, we expect that servicers will be very busy through October,” he added.

Despite the continued improvements in the market, Freddie Mac has indefinitely extended its multi-family home forbearance program ahead of its September 30 expiration date.

Here are some more highlights from the survey:

  • By stage, 12.4% of total loans in forbearance are in the initial forbearance plan stage, while 78.7% are in a forbearance extension. The remaining 8.9% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.05% to 0.04%.
  • Of the cumulative forbearance exits for the period from June 1, 2020, through September 26, 2021, at the time of forbearance exit:
    • 28.9% resulted in a loan deferral/partial claim.
    • 21.7% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 16.1% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
    •  12.5% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
    •  12.0% resulted in a loan modification or trial loan modification.
    • 7.4% 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.
  • Weekly servicer call center volume:
    • As a percent of servicing portfolio volume (#), calls decreased relative to the prior week: from 7.9% to 5.9%.
    • Average speed to answer decreased from 1.7 minutes to 1.5 minutes.
    • Abandonment rates decreased from 4.5% to 4.2%.
    • Average call length remained the same relative to the prior week at 8.2 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of September 26, 2021:
    • Total: 2.89% (previous week: 2.96%)
    • IMBs: 3.19% (previous week: 3.24%)
    • Depositories: 2.93% (previous week: 3.06%)