Mortgage

Forbearance figures unchanged as aid for some debtors ends quickly

Servicers are preparing for a likely active September, as the slow pace in August resulted in few changes to the deferral numbers towards the middle of the month.

The mortgages remaining in COVID-19-related forbearance plans accounted for 3.25% of the total for the second straight week for the period August 16-22, according to the MBA's Weekly Forbearance and Call Volume Survey. The percentage equates to approximately 1.6 million homeowners. Of that amount, 3.5% was held with independent mortgage lenders, up from 3.48% the previous week, while the percentage of deferred loans with depository institutions remained at 3.35% weekly.

However, according to Mike Fratantoni, senior vice president and chief economist at MBA, larger fluctuations are to be expected.

"We expect a sharp spike in forbearance exits over the next month as many borrowers hit the 18-month mark and their forbearance plans end," he said in a press release.

In the first few weeks that homeowners were offered coronavirus protection through the CARES Act, requests for cease and desist rose more than tenfold. Those thousands who were granted a reprieve in March 2020 and who still remain in Forbearance, that relief will run out in the coming weeks.

The August data could give an indication of what next month's numbers could bring. "Most borrowers who got out in August either postpone or receive an amendment," noted Fratantoni.

Of the loans that had already been deferred between June 1, 2020 and August 22, 2021, 28.3% of them ended in deferral or partial claims and 22.5 percent belonged to borrowers who made regular payments during the deferral. Another 16% dropped out without an existing loss mitigation plan, while 13.1% were reinstated. Loan modifications resulted in 11.2% of homeowners exiting forbearance, and 7.5% of exits were due to either refinancing or property sales. The remaining 1.4% ended up in repayment plans, short sales or replacement contracts.

Secondary mortgage lenders' forbearance stocks barely moved either. The number of Forborne mortgages backed by Ginnie Mae remained at 3.92% of the volume from week to week, while those held by Fannie Mae and Freddie Mac were also unchanged at 1.66%. Portfolio lenders and private label securities bad loans rose three basis points to 7.18% from 7.15% the previous week.

Of the currently troubled borrowers, 10.2% are in the initial forbearance phase and 81.7% are in the extension phase. Forbearance re-entries represented 7.7% of all forbearance plans.

Forbearance requests as part of total service volume remained unchanged for the week at 0.5%, and the share of call center activity fell by a full percentage point to 6.3% from 7.3% in the previous week.

The MBA survey data represents approximately 74%, or 36.9 million loans in the mortgage first aid market for the week. Ginnie Mae-covered mortgages accounted for 25.1% of serviced loans, with 56.4% guaranteed by either Fannie Mae or Freddie Mac. The remaining 18.5% belonged to the PLS / Portfolio segment.

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