Forbearance numbers drop sooner as aid runs out

The number of mortgage forbearance numbers continued to decline steadily through the last full week of September as the first wave of borrowers who took advantage of COVID-related financial relief 18 months ago will exit next month.

According to the latest results from the Mortgage Bankers Association's Forbearance and Call Volume Survey, the percentage of forbearance mortgages decreased to 2.89% of total lender volume for the weekly period ended Sept. 26. The percentage reflects a seven basis point decrease from a week earlier when forbearances accounted for 2.96% of the portfolios. The MBA survey represents 74% of the mortgage first aid market.

"The proportion of loans in forbearance declined faster last week, declining seven basis points as the number of exits increased and new applications and re-entries decreased," said Mike Fratantoni, senior vice president and chief economist of MBA, in a press statement.

"While 1.4 million homeowners remained on forbearance through September 26, that number is expected to decline sharply over the next few weeks as many hit the 18-month forbearance term," he noted.

Fannie Mae and Freddie Mac-secured deferred conventional mortgages accounted for 1.38% of government-sponsored corporate volume, down six basis points from 1.44% the previous week, while deferred government loans decreased to 3.35% of volume, versus 3.42%. The forbearance share in portfolio loans and private label securities fell from 6.91% in the previous week to 6.77%.

At the start of the pandemic, millions of borrowers with conventional and government-backed loans were quick to take advantage of the provisions of the CARES Act, which allowed homeowners to avail of deferral plans on request. The number of homeowners in distress peaked in June 2020 when approximately 4.3 million borrowers received COVID-related protections, but forbearance numbers have slowly declined since that time, with the pace accelerating as the terminations neared this fall . A week ago, the proportion of deferred loans was below 3% of the servicing volume for the first time since March last year.

"Most borrowers who exit the deferral through a workout opt ​​for a deferral plan that allows them to resume their original payment while the deferred amount is deferred until the end of the loan," Fratantoni said, suggesting that this will continue to be the predominant type of training in front of servicers.

Of the borrowers who had already left their forbearance plans between June 1, 2020 and September 26, 2021, 28.9% opted for a forbearance or partial claim option, making them the most common outcome for borrowers leaving. 21.7% were homeowners who kept their payments even though they received financial protection, while 16.1% stepped out without a loss mitigation plan.

Of the mortgages still due, 12.4% are currently in the initial phase and 78.7% are in the renewal phase. The remaining 8.9% are re-entrants.

Non-performing loans accounted for 3.19% of the portfolios of independent mortgage lender, down five basis points from 3.24% the previous week. Banks' forbearances fell even further, accounting for 2.93% of their volume, up from 3.06% week-to-week.

Despite the increased exit rate, the weekly call center volume of servicers declined compared to the previous week, accounting for 5.9% of the service portfolio, up from 7.9% in the previous period and the average time it took to answer calls decreased. from 1.7 minutes to 1.5 minutes. The decline in call center activity is likely just a temporary respite, Fratantoni said.

“Although the call volume decreased in the last week of September, we expect the service staff to be very busy through October,” he said.

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