Forbearance volume continues downward trend

Share of mortgages in forbearance decreases for the 14th consecutive week as job market improves

Forbearance volume continues downward trend

Thanks to a recovering job market, the number of homeowners in forbearance plans decreased to an estimated 2.1 million in May.

The Mortgage Bankers Association reported Tuesday that forbearance rates dropped two basis points from 4.18% of servicers’ portfolio volume in the prior week to 4.16% as of May 30.

By investor type, the share of Fannie Mae and Freddie Mac loans in forbearance edged down one basis point to 2.18%. Ginnie Mae loans in forbearance also dipped one basis point to 5.54%, while the forbearance share for portfolio loans and private-label securities (PLS) fell six basis points to 8.31% week over week. The share of loans in forbearance for independent mortgage bank (IMB) servicers was down two basis points to 4.34%. The percentage of loans in forbearance for depository servicers was down one basis point to 4.33%.

“The share of loans in forbearance declined for the 14th straight week, with small drops across most investor types and all servicer types,” said Mike Fratantoni, senior vice president and chief economist of MBA.

Read more: Major forbearance program gets extension

Fratantoni noted that forbearance exits declined to their lowest level (0.06%) since mid-February, and new forbearance requests (0.04%) matched the recent weekly low from early May.

“Although the headline employment growth number for May was lower than many had anticipated, other data show evidence of a strengthening job market. That is good news for homeowners who have been struggling and are looking for work, as more families can regain their incomes and start making their mortgage payments again.” Fratantoni said.

Other findings of MBA’s latest Forbearance and Call Volume Survey

• By stage, 11.1% of total loans in forbearance are in the initial forbearance plan stage, while 83.2% are in a forbearance extension. The remaining 5.7% are forbearance re-entries.

• Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.05% to 0.04%.

• Of the cumulative forbearance exits for the period from June 01, 2020, through May 30, 2021:

  • 27.4% resulted in a loan deferral/partial claim. 24.6% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 24.6% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 15.0% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
  • 14.0% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
  • 10.0% 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 1.5% resulted in repayment plans, short sales, deed-in-lieus or other reasons.