Forbearance Decline Accelerates as Economic Outlook Improves

The number of homeowners exiting mortgage forbearance increased this week, continuing an optimistic trend that comes alongside steadily improving economic numbers.

The “total number of loans now in forbearance decreased by 14 basis points from 3.40% of servicers’ portfolio volume in the prior week to 3.26%,” the Mortgage Bankers Association said in its weekly forbearance report.

The drop comes after a similar decrease last week; the decline has been ongoing for over a month, occurring alongside a limping but consistent economic recovery.

“The largest decrease in a month in the share of loans in forbearance came from a jump in forbearance exits, as many homeowners are nearing the end of their forbearance terms,” MBA Chief Economist Mike Fratantoni said in the release.

“The forbearance share declined for all investor and servicer categories,” he continued. “New forbearance requests picked up slightly this week, particularly for Ginnie Mae loans, but overall trends remain positive. Incoming data continues to support our forecast of an improving job market in the months ahead.”

Analysts have predicted that the rate of forbearance exits may rise even more in the near future as policy expiry dates continue to loom.