Mortgage Application Volume Continues Decline

The volume of
mortgage applications for both home purchase and refinancing fell for the third
straight time during the week ended February 19.
The Mortgage Bankers
Association (MBA) says its Market Composite Index, a measure of that volume,
dropped 11.4 percent on a seasonally adjusted basis. It was the largest single
week decline since the week ended April 3, 2020. On an unadjusted basis the index
was down 10.0 percent.

The Refinancing
Index decreased 11 percent from the previous week but was still 50 percent
higher than the same week one year ago. The refinance share of mortgage
activity decreased to 68.5 percent of total applications from 69.3 percent the
previous week.

The seasonally
adjusted Purchase Index dropped 12 percent and was 8 percent lower before adjustment.
Activity was 7 percent higher than the same week one year ago.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage
rates have increased in six of the last eight weeks, with the benchmark 30-year
fixed rate last week climbing above 3 percent to its highest level since
September 2020. As a result of these higher rates, overall refinance activity
fell 11 percent to its lowest level since December 2020
, but remained 50
percent higher than a year ago,” said Joel Kan, MBA’s Associate Vice President
of Economic and Industry Forecasting. “Additionally, the severe winter weather
in Texas affected many households and lenders, causing more than a 40 percent
drop in both purchase and refinance applications in the state last week.” 

Added
Kan, “The housing market in most of the country remains strong, with activity
last week 7 percent higher than a year ago. The average loan size of purchase
applications increased to a record $418,000, in line with the accelerating
home-price growth caused by very low inventory levels.” 

The
FHA share of total applications jumped to 11.2 percent from 9.0 percent the previous
week while the VA share fell to 11.9 percent from 13.2 percent and the USDA
share dipped 0.1 point to 0.3. The balance of all loans was $344,800, up from
$338,200 and for purchase loans the balance grew from $412,200 to $418,000.

The average
contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at
or below the current conforming limit of $548,250 increased to 3.08 percent
from 2.98 percent, with points increasing to 0.46 from  0.43. The effective rate was 3.22 percent. 

The
rate for jumbo 30-year fixed-rate mortgages, loans with balances greater than the
conforming limit, increased to 3.23 percent from 3.11 percent, with points increasing to 0.43 from
0.35. The effective rate was 3.35 percent.

Thirty-year
FRM backed by the FHA had an average rate of 3.00 percent with 0.33 point. The
prior week the rate was 2.93 percent with 0.27 point. The effective rate
increased to 3.10 percent.  The rate for
15-year fixed-rate mortgages increased 9 basis points to 2.56 percent and
points grew to 0.40 from 0.36. The effective rate was 2.66 percent.

The
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) was unchanged
at 2.83 percent, with points
decreasing to 0.36 from 0.70. The effective rate declined to 3.10 percent.  The ARM share of applications increased from
2.4 to 2.7 percent.  

MBA’s Weekly Mortgage Applications
Survey has been conducted since 1990 and covers over 75 percent of all U.S.
retail residential applications Respondents include mortgage bankers,
commercial banks, and thrifts. Base period and value for all indexes is March
16, 1990=100 and interest rate information is based on loans with an 80 percent
loan-to-value ratio and points that include the origination fee.

MBA’s latest Forbearance and Call Volume Survey found a 7-basis point
decline in the total number of loans in forbearance t
o 5.22 percent of all
first liens as of February 14, 2021. According to MBA’s estimate, 2.6 million homeowners
are in forbearance plans.  Of those
loans, 15.9 percent are in the initial forbearance plan stage, while 81.6
percent are in a forbearance extension. The remaining 2.5 percent are re-entries
in the program. 

The
share of Fannie Mae and Freddie Mac (GSE) loans in forbearance decreased to
2.97 percent –
a 4-basis-point improvement. Ginnie Mae (FHA and VA) loans in forbearance ticked
down 2 basis points to 7.32 percent, while the forbearance share for portfolio
loans and private-label securities (PLS) decreased by 20 basis points to 8.94
percent. The percentage of loans in forbearance serviced by independent
mortgage banks (IMB) fell 15 basis points to 5.54 percent, and the percentage
of forborne loans in depository servicers’ portfolios rose 2 basis points to
5.28 percent.

“The share of loans in forbearance has declined for
three weeks in a row, with portfolio and PLS loans decreasing the most this
week. This decline was due to a sharp increase in borrower exits, particularly
for IMB servicers,” said
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Requests for new
forbearances dropped to 6 basis points, matching a survey low.” 

Fratantoni added, “The housing market is
quite strong, with home sales, home construction, and home price data all
testifying to this strength. Policymakers and the mortgage industry have helped
enable this during the pandemic by providing millions of homeowners support in
the form of forbearance. The decision to extend the allowable duration of
forbearance plans should provide for a smoother transition this year as the job
market continues to recover.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from February 8 through February 14, 2021 and
represents 74 percent of the first-mortgage servicing market (37.1 million
loans).

Source: mortgagenewsdaily.com

HUD extends COVID-19 forbearance for FHA loans

The U.S. Department of Housing and Urban Development on Tuesday extended COVID-19 foreclosure and forbearance moratoriums for FHA and USDA loans to June 30, 2021. It also extended the deadline for the first legal action and the reasonable diligence time frame to 180 days.

This announcement follows FHFA action last week to extend moratoriums for loans backed by Fannie Mae and Freddie Mac.

The measures announced by HUD today include:

  • Extending the timeframe for homeowners to request the start of a COVID-19 forbearance from their mortgage servicer through June 30, 2021.
  • Expanding the COVID-19 forbearance to allow up to two forbearance extensions of up to three months each for homeowners who requested a COVID-19 forbearance on or before June 30, 2020. These extensions are designed to provide relief to homeowners who will be nearing the end of their maximum 12-month forbearance period and have not yet stabilized their financial situation.
  • Expanding the use of FHA’s streamlined COVID-19 loss mitigation home retention and home disposition options to all homeowners who are behind on their mortgage payments by at least 90 days. This expansion will require mortgage servicers to assess more homeowners for a streamlined waterfall of loss mitigation home retention options, starting with FHA’s COVID-19 Standalone Partial Claim.

Mortgage servicers take steps to support borrowers amid COVID-19

As call volumes have spiked to a level not seen since last April, lenders and servicers need to prepare for a significant increase in their workload as they help borrowers through difficult times.

Presented by: Computershare Loan Services

“As President Biden has made clear, it is urgent that we help homeowners throughout the nation who are struggling financially from this unprecedented national emergency,” said Acting HUD Secretary Matthew Ammon. “The steps we are taking today will provide both immediate relief to those in desperate need of assistance and help more homeowners keep their homes and resume their payments when the pandemic subsides.”

Last week, the FHFA announced that borrowers with mortgages backed by Fannie Mae and Freddie Mac may be eligible for an additional forbearance extension of up to three months. FHFA forbearance plans initially had a 12 month expiration date, however, the government entity is now allowing borrowers up to 15 months of coverage.

According to the agency, eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of Feb. 28, 2021. The FHFA said other limits may apply to the extension but did not provide specific detail.

Source: housingwire.com

Forbearance rate drops again, to 5.29%

The total number of mortgages in forbearance declined six basis points to 5.29% in the week ending Feb. 7, according to the latest estimate from the Mortgage Bankers Association.

The trade group said 2.6 million homeowners are currently in forbearance plans.

“The share of loans in forbearance declined to the lowest level since April 5th of last year, due to decreases in both the GSE and Ginnie Mae portfolios,” said MBA Vice President and Chief Economist Mike Fratantoni.

According to the MBA, Fannie Mae and Freddie Mac loans in forbearance decreased six basis points to 3.01%. Ginnie Mae loans decreased 12 basis points to 7.34%, while the share for portfolio loans and private-label securities (PLS) remained unchanged relative from the prior week, at 9.14%.

The percentage of loans in forbearance for nonbank servicers decreased 4 basis points to 5.69%, while the percentage of loans in forbearance for depository servicers decreased 10 basis points to 5.26%.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.

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“Similar to the trend in recent months, the first week of February
showed a faster pace of exits from forbearance compared to recent weeks, while new forbearance requests were unchanged,” Fratantoni said.

“MBA expects the rollout of the vaccines to boost economic growth through the course of the year, leading to a stronger job market and a greater ability for more struggling homeowners to get back on their feet. We do believe that additional support is needed until they have regained their jobs and incomes.”

According to the MBA, 16.07% of total loans in forbearance are in the initial stage while 81.42% are in a forbearance extension. Just over 2.5% are forbearance re-entries.

The MBA’s survey found that of the cumulative exits between June 1, 2020, and Feb. 7, 28.2% of borrowers continued to make their monthly payments during the forbearance period. Of those exiting forbearance, 25.5% resulted in a loan deferral/partial claim, and 15.4% resulted in reinstatements, in which past-due amounts are paid back upon exit.

About 14% of exits represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place. The survey found that 7.7% of exits resulted in loan modifications, and 7.5% of exits resulted in loans paid off through either a refinance or by selling the home.

On the day that the MBA released its latest survey, the Biden administration extended forbearance and eviction moratoriums an additional three months, through June 30, 2021. Homeowners with FHA loans will now be able to receive up to six months of additional mortgage payment deferrals if they entered before June 30, 2020. The Biden administration’s FHA also gave homeowners more time to request a pause or reduction in mortgage payments through the CARES Act.

However, the measures made Tuesday don’t apply to borrowers with loans backed by Fannie Mae and Freddie Mac. Those borrowers can request forbearance for up to 15 months if they apply by the end of February.

Source: housingwire.com

Slight Rate Increases Dampen Mortgage Application Volume

Mortgage
application activity gave back much of the previous week’s gains as interest
rates increased. The Mortgage Bankers Association (MBA) said its Market
Composite Index, a measure of mortgage loan application volume, decreased 4.1
percent
on a seasonally adjusted basis during the week ended February 5 and was
down 3 percent before adjustment.

The
Refinance Index, which had surged by 11 percent during the last week in
January, was down 4 percent last week but was still 46 percent higher than the
same week one year ago. The refinancing share of overall activity decreased to
70.2 percent from 71.4 percent the previous week.

The
seasonally adjusted Purchase Index dropped 5 percent from one week earlier but
was up 2 percent from the prior week and 17 percent year-over-year on an
unadjusted basis.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage rates
have increased in four of the first six weeks of 2021, with jumbo rates being
the only loan type that saw a decline last week. Despite some weekly
volatility, Treasury rates have been driven higher by expectations of faster
economic growth as the COVID-19 vaccine rollout continues,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting. “With the
30-year fixed rate increasing to 2.96 percent – a high not seen since last
November – refinances declined, and their share of total applications dipped to
the lowest level in three months. Government refinance applications did buck
the trend and increase, and overall activity was still 46 percent higher than a
year ago.
Demand for refinances is still very strong this winter.” 

Added Kan, “Purchase applications cooled the first week of February, but homebuyers are
still very active. Purchase activity was 17 percent higher than last year, and
the average purchase loan size continued to increase, reaching another survey
high of $402,200, as the higher-priced segment of the market continues to
perform well.”

The
FHA share of total applications increased to 9.5 percent from 9.1 percent the
previous week and the VA share grew to 13.3 percent from 12.1 percent. The USDA
share was unchanged at 0.4 percent. The average purchase price dipped to
$332,400 from $332,100 and the balance of a purchase mortgage grew from
$398,600 to $402,200.

The
average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances
at or below the conforming limit of $548,250 increased to 2.96 percent from
2.92 percent; Points increased to 0.36 from 
0.32 and the effective rate increased. 

The rate for jumbo 30-year
FRM, loans with balances exceeding the conforming limit, declined 1 basis point
to 3.11 percent. Points decreased to 0.29 from 0.32 and the effective rate also
moved lower.

Thirty-year FRM backed by
the FHA had a rate of 2.97 percent with 0.36 point. The prior week the rate was
2.94 percent with 0.29 point. The effective rate increased.  

The rate for 15-year FRM was
2.50 percent, up from 2.44 percent, with points decreasing to 0.29 from 0.32.
The effective rate increased from last week.

The average contract
interest rate for 5/1 adjustable-rate mortgages (ARMs) increased 4 basis points
to 2.92 percent and points declined to 0.36 from 0.46, leaving the effective
rate unchanged. The ARM share of activity increased to 2.3 percent of total
applications.

MBA’s Weekly
Mortgage Applications Survey has been conducted since 1990 and covers over 75
percent of all U.S. retail residential applications Respondents include
mortgage bankers, commercial banks, and thrifts. Base period and value for all
indexes is March 16, 1990=100 and interest rate information is based on loans
with an 80 percent loan-to-value ratio and points that include the origination
fee.

MBA’s latest Forbearance and Call Volume Survey showed
that the total number of loans now in forbearance decreased by 3 basis points
over the prior week. As of January 31, 5.35 percent of servicers’ portfolios
were in active plans, down from  5.38
percent a week earlier and equating to an estimated total of 2.7 million homeowners.
By stage, 16.52 percent of forborne loans are in their initial plan stage,
while 80.98 are in a forbearance extension. The remaining 2.50 percent are
forbearance re-entries. 

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased to 3.07
percent – a 3-basis-point
improvement. The Ginnie Mae (FHA and VA) share of loans in forbearance
decreased 5 basis points to 7.46 percent. The forbearance share for portfolio
loans and private-label securities (PLS) decreased by 2 basis points to 9.14
percent. The percentage of loans in forbearance for independent mortgage bank
(IMB) servicers decreased 4 basis points to 5.73 percent, and those for depository
servicers decreased 1 basis point to 5.36 percent.

“The share of loans in forbearance decreased at the end
of January across all investor categories. Almost 14 percent of homeowners in
forbearance were reported as current on their payments at the end of last
month, but the share has declined nearly every month from 28 percent in May,” said Mike Fratantoni,
MBA’s Senior Vice President and Chief
Economist. “While
new forbearance requests increased slightly at the end of January, the rate of
exits picked up somewhat but remained much lower than in recent months. We are
anticipating a sharp increase in exits in March and April as borrowers hit the
12-month expiration of their forbearance plans.” 

Fratantoni added, “The job market rebounded
slightly in January following a decline in December, but there are still 6.5
percent fewer jobs in the U.S. economy compared to February 2020. The
proportion of long-term unemployed also remains troubling, with 4 million
people who have been actively looking for work for 27 weeks or more. These are
the homeowners who are likely to still be in forbearance and need additional
support until the job market recovers to a greater extent.”

MBA’s latest Forbearance and Call Volume
Survey covers the period from January 25 through January 31, 2021 and
represents 74 percent of the 37.0 million loans in the servicing market.

Source: mortgagenewsdaily.com

Borrowers With Fannie Mae, Freddie Mac Mortgages Can Get Additional Forbearance, Regulator Says

The Federal Housing Finance Agency is extending the length of time that borrowers can be in a COVID-related forbearance on mortgages back by Fannie Mae and Freddie Mac.

Originally, Fannie Mae and Freddie Mac instructed loan servicers that mortgage borrowers could request up to 12 months of forbearance on their mortgages as a result of the coronavirus pandemic.

Now, the FHFA is allowing these borrowers to request a forbearance extension of up to three months, the agency announced Tuesday.

While in forbearance, mortgage borrowers are not required to make their monthly mortgage payments. When forbearance ends, these borrowers have a range of options to choose from to pay back the owed amount, including tacking the missed payments onto the end of the mortgage’s duration.

Homeowners must already be in forbearance on their mortgage by Feb. 28 to qualify for the three-month extension.

Separately, the FHFA is extending the moratorium on single-family foreclosures and evictions for properties with mortgages backed by Fannie and Freddie by one month until March 31. FHFA Director Mark Calabria said the steps were being taken “to keep families in their home during the pandemic.”

The FHFA expects that Fannie and Freddie will bear between $1.5 billion and $2 billion in expenses as a result of the COVID-19 foreclosure moratorium.

As of Jan. 31, 3.07% of Fannie Mae and Freddie Mac loans are in forbearance, according to recently-released data from the Mortgage Bankers Association. That’s better than the overall forbearance rate for all mortgages nationwide, which stands at 5.35%.

The number of loans in forbearance decreased at the end of January, the Mortgage Bankers Association reported. “While new forbearance requests increased slightly at the end of January, the rate of exits picked up somewhat but remained much lower than in recent months,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.

Fratantoni had expected the rate of exits from forbearance to pick up in March and April as people came up against the original 12-month deadline to resume making payments. He warned that, given the employment situation nationwide, homeowners who are unemployed and still in forbearance would “need additional support until the job market recovers to a greater extent.”

Source: realtor.com

Forbearance rate slowly descends to 5.35%

The U.S forbearance rate is falling, though not as quickly as it once was.

Data released on Monday by the Mortgage Bankers Association showed that the share of servicers’ portfolio volume in forbearance fell 3 basis points to 5.35% last week.

For the third month in a row, the MBA estimated 2.7 million homeowners are in some form of forbearance, and for almost four months now, forbearance portfolio volume has hovered between 5% and 6% — the longest a percentage range has held since the survey’s origins in May.

However, in the current environment, any sign of forbearance waning is a welcome one. Last week every investor class managed to see declines, with Fannie Mae and Freddie Mac once again claiming the lowest forbearance rate at 3.07%.

Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, also fell 5 basis points to 7.46%. And even though servicers continued to buy out delinquent loans from the Ginnie Mae pool (subsequently reclassifying them as portfolio loans) the forbearance share for portfolio and private-label securities also managed to fall to 9.14%.


Here’s how to find property owners ready to sell

In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

Presented by: PropStream

The MBA data shows that homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments. According to Mike Fratantoni, the MBA’s chief economist, almost 14%of homeowners in forbearance were reported as current on their payments at the end of last month, but that share has declined nearly every month from 28% in May.

“While new forbearance requests increased slightly at the end of January, the rate of exits picked up somewhat, but remained much lower than in recent months. We are anticipating a sharp increase in exits in March and April as borrowers hit the 12-month expiration of their forbearance plans,” Fratantoni said.

Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped.

To Fratantoni, servicers and policy makers need to be looking at the long-term unemployed, especially those who have been actively looking for work for 27 weeks or more as reported in January’s job data.

“These are the homeowners who are likely to still be in forbearance and
need additional support until the job market recovers to a greater extent,” Fratantoni said.

But economists are still showing signs of confidence in the market. HousingWire’s lead analyst, Logan Mohtashami, noted with an improving employment situation comes an economic improvement well past forbearance’s peak. Couple that with strong credit profiles from homeowners and nested equity and Mohtashami can outperform on rising home prices.

“This isn’t 2008 all over again. That recovery was slow, but today our demographics are better, and our household balance sheets are healthier. The fiscal and monetary assistance now is hugely improved from what we saw after 2008. We have everything we need to get America back to February 2020 jobs levels; we just need time,” Mohtashami said.

Source: housingwire.com

Forbearances hold steady as exits slow

The U.S. forbearance rate held relatively steady last week, rising one basis point to 5.38% of servicers’ portfolio volume, according to a survey from the Mortgage Bankers Association released on Monday.

The virtually unchanged rate of forbearance volume can be attributed to a stalemate between steady declines in almost every investor class and a whopping 26 basis point jump in portfolio loans and private-label securities, bringing their forbearance share to 8.94%.

Fannie Mae and Freddie Mac, on the other hand, once again claimed the smallest forbearance rate at 3.11% while Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, fell 6 basis points to 7.61%.

“The good news is that the forbearance numbers for GSE loans continues to decline more consistently, as these borrowers typically have stronger credit and more stable employment,” said Mike Fratantoni, MBA’s senior vice president and chief economist.

Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped, and Fratantoni noted the rate of exits from forbearance also slowed in the week prior.


Here’s how to find property owners ready to sell

In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

Presented by: PopStream

 

Data analytics company Black Knight noted that last week’s sluggish forbearance removals were the second lowest weekly removal volume observed to date since the company began monitoring the situation in April. 

“Removal rates have also slowed noticeably following the six-month point of forbearance plans,” said Andy Walden, director of market research for Black Knight. “This suggests that those borrowers who remain in forbearance were likely more heavily impacted by the economic downturn and thus are less likely to leave such plans before the full allowable 12-month period runs down.”  

Of the cumulative forbearance exits for the period from June 1, 2020 through Jan. 17, 2021, 28.7% represented borrowers who continued to make their monthly payments during their forbearance period – a one basis point drop, according to the MBA.

During that same time period, those who exited without a loss mitigation plan in place also fell slightly to 13.4% from 13.5% the week prior.

The MBA once again estimates there are now 2.7 million Americans in some form of forbearance, and that number has remained unchanged for nearly two months.

According to a recent paper from researchers at the business schools of Columbia University, Northwestern University, Stanford University, and the University of Southern California, by October 2020, debt forbearance allowed U.S. consumers to miss about $43 billion of debt payments. If trends continue, more than 60 million consumers would miss about $70 billion of their debt payments by the end of the first quarter of 2021.

Source: housingwire.com