With many borrowers reaching the end of their six-month terms, the total share of loans in forbearance plummets across all loan types
The total share of loans in forbearance dropped by 49 basis points, from 6.81% of servicers’ portfolio volume the prior week to 6.32% as of Oct. 4, according to new data from the Mortgage Bankers Association. According to the MBA’s latest estimate, 3.2 million homeowners are currently in forbearance plans.
According to the MBA’s latest Forbearance and Call Volume Survey, the share of Fannie Mae and Freddie Mac loans in forbearance dropped for the 18th straight week to 4.03% – an improvement of 36 basis points. The share of Ginnie Mae loans in forbearance plummeted 89 basis points to 8.27%, while the forbearance share for portfolio loans and private-label securities fell 33 basis points to 10.06%. The forbearance percentage for depository servicers fell 50 basis points to 6.53%, and the percentage for independent mortgage bank servicers fell 54 basis points to 6.65%.
“The share of loans in forbearance declined across all loan types. With the forbearance program for federally backed loans under the CARES Act reaching the six-month mark, many borrowers saw their forbearance plans expire because they did not contact their servicer,” said Mike Fratantoni, MBA senior vice president and chief economist. “Another reason for expirations was that borrower information needed to determine an appropriate loss mitigation option was not yet in place.”
Fratantoni said that borrowers with federally backed mortgages needed to contact their servicers to obtain another six months of forbearance if they were still impacted by the COVID-19 pandemic.
“On a more positive note, nearly two-thirds of borrowers who exited forbearance remained current on their payments, repaid their forborne payments, or moved into a deferral plan,” he said. “All of these borrowers have been able to resume – or continue – their pre-pandemic monthly payments.”