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Monday, June 28, 2021

MBA Survey: "Share of Mortgage Loans in Forbearance Slightly Decreases to 3.91%"

by Calculated Risk on 6/28/2021 04:00:00 PM

Note: This is as of June 20th.

From the MBA: Share of Mortgage Loans in Forbearance Slightly Decreases to 3.91%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 2 basis points from 3.93% of servicers’ portfolio volume in the prior week to 3.91% as of June 20, 2021. According to MBA’s estimate, 2 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 3 basis points to 2.02%. Ginnie Mae loans in forbearance decreased 2 basis points to 5.13%, while the forbearance share for portfolio loans and private-label securities (PLS) decreased 1 basis point to 7.97%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 2 basis points to 4.03%, and the percentage of loans in forbearance for depository servicers declined 2 basis points to 4.14%.

“The share of loans in forbearance declined for the 17th straight week, with small declines across almost every loan category,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The rate of forbearance exits slowed – as has been typical in mid-month reports – but the pace of new forbearance requests remained at a very low level of 4 basis points.”

Added Fratantoni, “The steady improvement in the aggregate forbearance numbers is heartening, as it is evidence that improving economic conditions are allowing more homeowners to get back on their feet. However, we continue to closely monitor the number of forbearance re-entries, reflecting borrowers who exited forbearance but had to re-enter due to hardships. These re-entries accounted for 6.2 percent of loans in forbearance this week.”
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 2020, and has trended down since then.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.04%".

Note: These deferral plans are very popular. Basically when the homeowner exits forbearance, they just go back to making their regular monthly payments, they are not charged interest on the missed payments, and the unpaid balanced is deferred until the end of the mortgage.