MBA: Forbearances Fell To 1.67% In November

The total number of loans in forbearance fell from 2.06% of servicers’ portfolio volume to 1.67% in November, according to the Mortgage Bankers Association’s (MBA) Loan Monitoring Survey.

MBA estimates 835,000 homeowners are currently in forbearance plans.

Independent mortgage banks saw a 0.34% decline from 2.28% to 1.94%, while depositories saw a 0.5% drop from 2.02% to 1.52%.

The share of forborne Fannie and Freddie loans fell to 0.76%, down by 16 basis points, while Ginnie Mae loans fell to 2.10%, down 42 basis points. PLS and portfolio loans in forbearance dropped by 106 basis points to 3.94%.

“The share of loans in forbearance in November declined – albeit at a slower pace than October – as borrowers continued to near the expiration of their forbearance plans and moved into permanent loan workout solutions,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. 

By stage, 18.3% of total loans in forbearance are in the initial forbearance plan stage, 68.4% are in forbearance extension, and the remaining 13.3% are in re-entry, including re-entry with extensions. 

Total current loans serviced rose to 94.58%, up from 94.32% in October.

Total completed loan workouts from 2020 that were current fell to an 83.69% share of total completed workouts from 84.04% in October.

Forbearance rates have improved significantly in recent months as the economy continues its slow recovery. Seriously delinquent mortgages dropped by more than half year-over-year at seven national banks.

“After an initial surge following the end of the government’s moratorium, it appears that foreclosure activity may be slowing down as we move towards the end of the year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM company.

“Despite concerns about a pandemic-driven wave of defaults, mortgage delinquency rates, and foreclosure starts have continued to decline due to government and industry programs, and a recovering U.S. economy.”

However, new forbearance plan starts have been inching up, including a jump of nearly 8,000 the week before Thanksgiving.

Here are some highlights from the report:

  • Of the cumulative forbearance exits for the period from June 1, 2020, through November 30, 2021, at the time of forbearance exit:
    • 29.1% resulted in a loan deferral/partial claim.
    • 19.9% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 16.8% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
    • 14.1% resulted in a loan modification or trial loan modification.
    • 11.8% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
    • 6.9% 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.
  • The five states with the highest share of loans that were current as a percent of servicing portfolio: Idaho, Washington, Utah, Colorado, and Oregon.
  • The five states with the lowest share of loans that were current as a percent of servicing portfolio: Louisiana, Mississippi, New York, West Virginia, and Oklahoma.