Monday, October 19, 2020

MBA Survey: "Share of Mortgage Loans in Forbearance Declines to 5.92%"

by Calculated Risk on 10/19/2020 04:00:00 PM

Note: This is as of October 11th.

From the MBA: Share of Mortgage Loans in Forbearance Declines to 5.92%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 40 basis points from 6.32% of servicers’ portfolio volume in the prior week to 5.92% as of October 11, 2020. According to MBA’s estimate, 3.0 million homeowners are in forbearance plans.
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“The share of loans in forbearance declined across all loan types, primarily because of borrower forbearance plans expiring at the six-month mark. Federally backed loans under the CARES Act are eligible to be extended for up to 12 months, but borrowers must contact their servicer for an extension. Without that contact, borrowers exit forbearance, whether they are delinquent or current on their loan,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Borrowers with federally backed mortgages should contact their servicer if they still have a hardship due to the pandemic.”

Added Fratantoni, “The steady improvement for Fannie Mae and Freddie Mac loans highlights the improvement in some segments of the job market and broader economy. The slower decline for Ginnie Mae loans continues to show that this improvement has not been uniform, and that many are still struggling to regain their footing.”
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By stage, 26.32% of total loans in forbearance are in the initial forbearance plan stage, while 72.08% are in a forbearance extension. The remaining 1.60% are forbearance re-entries.
emphasis added
MBA Forbearance Survey Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April, and has been trending down for the last few months.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.11% to 0.10%."

There hasn't been a pickup in forbearance activity related to the end of the extra unemployment benefits.