The number of loans in forbearance as of August 29 fell from 3.25% of portfolio volume to 3.23%, according to the Mortgage Bankers Association’s (MBA) latest survey. That puts the estimated number of homeowners in forbearance at 1.6 million.
For Fannie Mae and Freddie Mac loans, the number fell 3 basis points to 1.63%. Ginnie Mae loans fell from 3.92% to 3.62%. But portfolio loans and private-label securities increased the number of homes in forbearance 34 basis points, from 7.18% to 7.52%.
Independent mortgage bank servicers saw a drop of 1 basis point to 3.49%, and depository servicers saw a drop of 2 basis points to 3.33%.
“The share of loans in forbearance decreased by two basis points last week, with both new requests and exits remaining at a slow pace as we reached the end of August,” MBA’s Senior Vice President and Chief Economist Mike Fratantoni said.
“There was another large shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools and moved onto servicer balance sheets. As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance. These buyouts enable servicers to stop advancing principal and interest payments, and work with borrowers to begin paying again before they are re-securitized into Ginnie Mae pools.”
The Consumer Financial Protection Bureau issued a rule that took effect on August 31 to help homeowners avoid foreclosure. It requires lenders to follow three steps before starting a foreclosure:
1. Requiring loan servicers to review a loss mitigation application submitted by the borrower that shows the borrower’s financial and household information, which can help the lender determine the next steps.
2. Requiring servicers to verify the home has been abandoned under state and local legal definitions before proceeding with a foreclosure.
3. Loan servicers must make a diligent effort to contact the homeowner before beginning foreclosure and that the borrower has been unreachable for more than 90 days.
The CFPB’s new rule will remain in effect until January 1, 2022.