Forbearances plummetted to 2.62% of servicers’ portfolio volume last week, down from 2.89% the week before, according to the Mortgage Bankers Association’s (MBA) latest survey. The estimated number of homeowners in forbearance plans is around 1.3 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 seventeen basis points to 1.21%. Ginnie Mae loans fell forty-one basis points to 2.94%. Portfolio loans and private-label securities shares fell thirty-five basis points, from 6.77% to 6.91%.
Independent mortgage bank servicers saw a drop of thirty-seven basis points to 2.82%, and the share for depository servicers declined twenty-four points to 2.69%.
“Many borrowers reached the expiration of their forbearance term as we entered October. The pace of exits climbed to the fastest pace in over a year, and the share of loans in forbearance declined at the fastest rate since last October, dropping by 27 basis points. The decline was the largest for Ginnie Mae and portfolio/PLS loans,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
“Payment performance has remained steady for those who have exited forbearance into a workout since 2020, with more than 85% of those borrowers current as of October. It also continues to be striking that so many homeowners in forbearance have continued to make their payments. Almost 16 percent of borrowers in forbearance as of October 3rd were current.”
Frantantoni also noted that the Delta variant and supply chain problems contributed to slow job growth in September, but that rising employment and wages will support the housing market moving forward.
Here are some key findings from the report:
- By stage, 13.3% of total loans in forbearance are in the initial forbearance plan stage, while 77.5% are in a forbearance extension. The remaining 9.2% are forbearance re-entries.
- Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.04% to 0.05%.
- Of the cumulative forbearance exits for the period from June 1, 2020, through October 3, 2021, at the time of forbearance exit:
- 28.8% resulted in a loan deferral/partial claim.
- 21.3% represented borrowers who continued to make their monthly payments during their forbearance period.
- 16.5% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
- 12.6% resulted in a loan modification or trial loan modification.
- 12.3% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
- 7.2% 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 increased relative to the prior week: from 5.9% to 7.8%.
- Average speed to answer increased from 1.5 minutes to 2.5 minutes.
- Abandonment rates increased from 4.2% to 6.2%.
- Average call length increased from 8.2 minutes to 8.4 minutes.
- Loans in forbearance as a share of servicing portfolio volume (#) as of October 3, 2021:
- Total: 2.62% (previous week: 2.89%)
- IMBs: 2.82% (previous week: 3.19%)
- Depositories: 2.69% (previous week: 2.93%)