Mortgage

Forbearance numbers drop to three% of the service quantity

Borrowers continued to exit their forbearance plans at an accelerated pace, maintaining the momentum generated a week earlier based on the latest figures from the Mortgage Bankers Association.

According to the MBA's Forbearance and Call Volume Survey, forbearance mortgage volumes were 3% of all serviced loans for the September 6-12, an eight basis point decrease from 3.08% the previous week. The most recent drop came after a 15-point drop earlier in the month as hundreds of thousands of forbearance plans are pending review in September, which is likely to result in further cuts. The MBA estimates that there are currently around 1.5 million borrowers on guard.

"20% of the loans that are forbidden are either new forbearance requests or re-entrants," said Mike Fratantoni, senior vice president and chief economist of the MBA. "At this point, borrowers get out of forbearance extensions faster as they near or near their maximum forbearance period."

NPL accounted for 3.25% of the volume of the servicing portfolio of independent mortgage lenders, up from 3.33% a week earlier. At the depository institutions, forbearances fell to 3.1% of the total servicing volume from 3.15% in the previous week.

Of the current deferred borrowers, 11.3% are in the initial phase of deferral, while 80.2% remain in renewals. Re-entries accounted for 8.5% of all plans.

Millions of borrowers entered COVID-19-related moratorium plans thanks to the passage of the CARES law in March 2020, and subsequent legislation allowed two six-month extensions. The first wave of COVID-related leniency borrowers requiring the full 18 months of discharge is now nearing the end of protection.

However, securitized portfolio and private label loans were not covered by the federal aid mandate, and their forbearance figures have fluctuated differently over the past 18 months. Portfolio and PLS loans posted a weekly decrease of 32 basis points to 6.95% from 7.27% for an overall weekly decrease. Conventional mortgages, backed by Fannie Mae and Freddie Mac, also added to the decline, with deferred loans now accounting for 1.47% of the volume of government sponsored businesses, up from 1.52% a week earlier. Ginnie Mae deferred mortgage-backed mortgages traded the same stock at 3.39% week over week.

Of the troubled borrowers who got off their plans between June 1, 2020 and September 12, 2021, 28.6% of them ended up with forbearance or partial payment, and 21.9% were with homeowners who were deferring regular payments performed. Another 16.4% remained without a loss mitigation plan, while 12.7% were reinstatements. Loan modifications resulted in 11.6% of disposals, 7.4% resulted from either refinancing or the sale of the property. The remaining 1.4% ended up in repayment plans, short sales or replacement contracts.
The requests for deferrals as part of the total service volume remained unchanged for the week at 0.5%, while the call center activity of the servicers fell from 7.7% in the previous week to 6.3%.

The MBA started its forbearance and call center survey in April 2020 to track the number of bad loans compared to the pre-COVID-19 benchmarks from March this year. The survey data represents approximately 74%, or 36.8 million, of the market for initial mortgage care. Mortgages secured by Ginnie Mae accounted for 24.8% of the loans currently serviced, with 56.1% guaranteed by either Fannie Mae or Freddie Mac. The remaining 19.2% was attributable to the PLS / Portfolio segment.

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