MBA: Good News As Share Of Loans In Forbearance Nosedives

The total number of loans in forbearance took a nosedive this week, with numbers down in every category, according to the Mortgage Bankers Association’s (MBA) latest survey. Forbearances made up 3.08% of servicers’ portfolio volume, down from 3.23%. That puts the estimated number of homeowners in forbearance plans at 1.5 million.

For Fannie Mae and Freddie Mac loans, the number fell 11 basis points to 1.52%. Ginnie Mae loans fell from 3.63% to 3.39%. Portfolio loans and private-label securities shares fell 25 basis points, from 7.52% to 7.27%.

Independent mortgage bank servicers saw a drop of 16 basis points to 3.33%, and depository servicers saw a drop of 18 basis points to 3.15%.

“The share of loans in forbearance decreased by 15 basis points last week, as forbearance exits jumped to their fastest pace since March. The fast pace of exits outweighed the slight increase in new forbearance requests and re-entries,” said MBA Senior Vice President and Chief Economist Mike Fratantoni.

“Servicer call volume jumped last week as summer came to an end and many borrowers reached the end of their forbearance terms. We anticipate a similarly fast pace of exits in the weeks ahead, which should lead to increased call volume and a further decline in the forbearance share.”

Forbearance exits are being closely watched by industry analysts making predictions about the market 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, 10.7% of total loans in forbearance are in the initial forbearance plan stage, while 81.1% are in a forbearance extension. The remaining 8.2% 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 September 5, 2021, at the time of forbearance exit:
    • 28.3% resulted in a loan deferral/partial claim.
    • 22.2% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 16.3% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
    • 12.8% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
    • 11.5% 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 increased relative to the prior week: from 5.8% to 7.7%.
    • Average speed to answer increased from 1.0 minutes to 1.6 minutes.
    • Abandonment rates increased from 3.3% to 4.0%.
    • Average call length increased from 8.1 minutes to 8.2 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of September 5, 2021:
    • Total: 3.08% (previous week: 3.23%)
    • IMBs: 3.33% (previous week: 3.49%)
    • Depositories: 3.15% (previous week: 3.33%)