The number of mortgage loans in forbearance remains unchanged from last week, holding at 3.25%, according to the latest numbers from the Mortgage Bankers Association.
The report, released yesterday, estimates that 1.6 million homeowners are in forbearance plans.
The share of Fannie Mae and Freddie Mac loans in forbearance remained the same relative to the prior week at 1.66%. Ginnie Mae loans in forbearance also remained the same at 3.92%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 3 basis points to 7.18%.
The percentage of loans in forbearance for independent mortgage bank (IMB) servicers increased 2 basis points to 3.50%, and the percentage of loans in forbearance for depository servicers was unchanged at 3.35%.
But this week could be the calm before the storm. “We expect a sharp increase in forbearance exits over the next month as many borrowers reach the 18-month mark and see their forbearance plans end,” Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said in the release.
Analysts have predicted that the rate of forbearance may rise when policies begin expiring. According to Black Knight, that moment is here: nearly 750,000 active plans will expire in the next two months.
The mass expiration may boost the number of homes for sale, potentially increasing inventory by 15% from the June levels, about 211,700 more homes and 13.1% of all predicted sales during the next three months, according to a recent Zillow estimate.
The estimate is based on trends that showed “roughly 25% of borrowers who exited forbearance in the past year have listed their homes for sale afterward,” said Zillow senior managing economist Chris Glynn.
But he noted that those sellers may then become potential buyers. Plus, government agencies are allowing servicers to modify more loans. Both could diminish an inventory increase.
Here are the key findings of this week’s Forbearance and Call Volume Survey:
- Total loans in forbearance remained the same relative to the prior week at 3.25%.
- By investor type, the share of Ginnie Mae loans in forbearance remained the same relative to the prior week at 3.92%.
- The share of Fannie Mae and Freddie Mac loans in forbearance remained the same relative to the prior week at 1.66%.
- The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 7.15% to 7.18%.
- By stage, 10.2% of total loans in forbearance are in the initial forbearance plan stage, while 81.7% are in a forbearance extension. The remaining 8.1% are forbearance re-entries.
- Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained unchanged relative to the prior week at 0.05%.
- Of the cumulative forbearance exits for the period from June 1, 2020, through August 22, 2021, at the time of forbearance exit:
- 28.3% resulted in a loan deferral/partial claim.
- 22.5% represented borrowers who continued to make their monthly payments during their forbearance period.
- 16.0% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
- 13.1% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
- 11.2% resulted in a loan modification or trial loan modification.
- 7.5% 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 7.3% to 6.3%.
- Average speed to answer decreased from 1.5 minutes to 1.2 minutes.
- Abandonment rates decreased from 4.6% to 3.8%.
- Average call length increased from 7.9 minutes to 8.0 minutes.
- Loans in forbearance as a share of servicing portfolio volume (#) as of August 22, 2021:
- Total: 3.25% (previous week: 3.25%)
- IMBs: 3.50% (previous week: 3.48%)
- Depositories: 3.35% (previous week: 3.35%)