MBA: Forbearances Fall To 3%

Forbearances fell again this week, continuing to trend down as relief plans expire, according to the Mortgage Bankers Association’s (MBA) latest survey. Forbearances made up 3.00% of servicers’ portfolio volume, down from 3.08%. That puts the estimated number of homeowners in forbearance plans at around 1.5 million.

That’s a significant change from last year. In May 2020, the use of the forbearance provision peaked at about 3.4 million mortgages, representing about 7% of all single-family housing loans.

For Fannie Mae and Freddie Mac loans, the August 2021 number was down five basis points to 1.47%. Ginnie Mae loans held at 3.39%. Portfolio loans and private-label securities shares fell 32 basis points, from 7.27% to 6.95%.

Independent mortgage bank servicers saw a drop of eight basis points to 3.25%, and the share for depository servicers declined five points to 3.10%.

“The share of loans in forbearance decreased by eight basis points last week, as forbearance exits remained elevated, and new forbearance requests and re-entries were unchanged,” said MBA’s Senior Vice President Mike Fratantoni. 

“20% of loans in forbearance are either new forbearance requests or re-entries. At this point, borrowers in forbearance extensions are exiting at a faster rate as they near – or reach – the expiration of their maximum forbearance term.”  

Industry analysts are keeping a close eye on forbearance exits this month. A Zillow report estimated that 25% of homeowners exiting forbearance could end up selling rather than restarting payments, which could shock the market with new inventory.

The rush of exits could also result in an uptick in delinquency without loss mitigation plans in place.

Here are some more highlights from the survey:

  • By stage, 11.3% of total loans in forbearance are in the initial forbearance plan stage, while 80.2% are in a forbearance extension. The remaining 8.5% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.05%.
  • Of the cumulative forbearance exits for the period from June 1, 2020, through September 12, 2021, at the time of forbearance exit:
    • 28.6% resulted in a loan deferral/partial claim.
    • 21.9% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 16.4% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
    • 12.7% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
    • 11.6% 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 7.7% to 6.3%.
    • Average speed to answer increased from 1.6 minutes to 1.8 minutes.
    • Abandonment rates increased from 4.0% to 4.8%.
    • Average call length increased from 8.2 minutes to 8.3 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of September 12, 2021:
    • Total: 3.00% (previous week: 3.08%)
    • IMBs: 3.25% (previous week: 3.33%)
    • Depositories: 3.10% (previous week: 3.15%)