The Latest on Forbearance Trends

UnderwritingAs of August 10, the total number of loans now in forbearance dipped one basis point from 7.21% of servicers’ portfolio volume the week before to 7.20%, according to the Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey. A total of 3.6 million homeowners are in forbearance plans, it estimates.

Similarly, the share of Fannie Mae and Freddie Mac loans in forbearance came in at 4.93%, a one basis point retreat. Ginnie Mae loans in forbearance were unmoved at 9.54%, while there was an upward shift of three basis points to 10.37% in the forbearance share for portfolio loans and private-label securities. Meantime, there was an ascension one basis point to 7.48% in the percentage of loans in forbearance for depository servicers. Among independent mortgage bank servicers, the percentage of loans in forbearance ticked up to 7.43%, a jump of one basis point.

A total of 37.91% of total loans in forbearance are in the initial forbearance plan stage; 61.34% are in a forbearance extension. The remaining 0.75% are forbearance re-entries. Total weekly forbearance requests as a percent of servicing portfolio volume compared to thee week before receded from 0.11% to 0.10%.

While the share of loans in forbearance declined for the 10th consecutive week, the rate of improvement markedly slowed, said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.

“The extremely high rate of initial claims for unemployment insurance and high level of unemployment remain a concern, and are indications of the challenges many households are facing, while new forbearance requests remain low, particularly for Fannie Mae and Freddie Mac loans, the pace of exits from forbearance has declined for two straight weeks.”

During the week of March 30 to April 5, the number of home loans in forbearance ballooned from 2.73% to 3.74%, according to an MBA survey.

Ginnie Mae-backed mortgages experienced not only the most significant weekly expansion of 1.58%, but the highest overall share in forbearance requests at 5.89%.

Fratantoni said the nationwide shutdown of the economy to slow the spread of COVID-19 continues to spark hardships for millions of households, and more are contacting their servicers for relief in accordance with the forbearance provisions under the CARES Act.

“The share of loans in forbearance grew the first week of April, and forbearance requests and call center volume further increased. With mitigation efforts seemingly in place for at least several more weeks, job losses will continue and the number of borrowers asking for forbearance will likely continue to rise.

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