Nearly 4 Million Homeowners Now in Mortgage Forbearance Plans, Servicers May Get $500 Payments

Posted on May 5th, 2020

The mortgage forbearance rate worsened yet again compared to last week, though as expected the increase has slowed as the pool of borrowers grows larger.

As of April 26th, some 3.8 million homeowners were in forbearance plans, per the Mortgage Bankers Association’s (MBA’s) most recent Forbearance and Call Volume Survey.

The forbearance rate increased from 6.99% to 7.54%, a mere eight percent rise from a week earlier, but still more bad news for loan servicers.

And I should note that we’re about to begin a new month, so those on the fence last month could request forbearance this week, creating a new surge.

Forbearance Rate Tops 10% for FHA/VA Loans

  • Ginnie-backed loans have a forbearance rate of 10.45%
  • Fannie/Freddie loans have forbearance rate of 5.85%
  • Private-label securities and portfolio loans have rate of 8.30%
  • Depository banks have rate of 8.41%, independent mortgage bank (IMB) servicers have rate of 7.13%

In terms of loan type, government-backed home loans continue to fare worst, with Ginnie Mae mortgages (FHA loans and VA loans) seeing forbearance rates climb to 10.45% from 9.73%.

Meanwhile, the Fannie Mae and Freddie Mac forbearance rate rose from 5.46% to 5.85%.

Other mortgages, such as private-label securities and portfolio loans, which can include jumbo loans, increased from 7.52% to 8.30%.

With regard to institution type, depository banks saw their forbearance rate go up from 7.87% to 8.41%, and independent mortgage bank (IMB) servicers saw their rate move from 6.52% to 7.13%.

It’ll be interesting to see what happens in the second week of May once the next wave of borrowers request forbearance.

It seems we’ve kind of plateaued for the month of April, but a new month means new layoffs, business closures, losses of income, etc.

And regardless, the numbers are already way above what was originally forecast, perhaps because the forbearance offered via the CARES Act is very attractive to homeowners.

MBA Senior Vice President and Chief Economist Mike Fratantoni noted that the millions of additional Americans filing for unemployment throughout the week will likely make matters worse, “particularly as new mortgage payments come due in May.”

$500 for Each Mortgage in Forbearance?

  • More relief for mortgage servicers may be on the way
  • Via a $500 credit paid by Fannie/Freddie for each loan in forbearance
  • Unclear if the same would be extended to Ginnie Mae servicers
  • Or if it’s enough to offset the massive losses some servicers are experiencing

That brings us to how loan servicers will fare in all of this, especially nonbanks that might not have as much access to capital.

We know that Fannie Mae and Freddie Mac have agreed to buy mortgage loans in forbearance, and only require servicers to advance the first four months of missed payments.

But those enormous costs could still put enough strain on some servicers to wipe them out.

To further ease the situation, it has been reported that Fannie Mae and Freddie Mac will pay servicers $500 per loan in forbearance to ease the pain.

This is according to Jack Navarro, president of Shellpoint Mortgage Servicing, who spoke about the developing situation during a Tuesday morning conference call, per Inside Mortgage Finance.

The so-called “$500 deferment fee is scheduled to take effect on July 1,” assuming it’s approved by the Federal Housing Finance Agency (FHFA).

That fee would obviously offset some of the cost associated with the forbearance advances, at least partially.

But if the forbearance rate keeps climbing higher in May, it still might prove to be too little too late.

Navarro also spoke to what happens after forbearance, saying the plan is “to allow borrowers to very quickly go from the forbearance process to a current loan with payments deferred to the end of the mortgage.”

That backs up the Fannie/Freddie partial claim I spoke about last week, which would make it relatively painless for borrowers who regain their job/income to continue making mortgage payments and put this all behind them.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

46% of Homeowners in Forbearance Plans Still Made Their Mortgage Payments

Posted on May 22nd, 2020

Another interesting trend has emerged from the latest mortgage forbearance data, this time courtesy of a new report from data analytics company Black Knight.

Nearly 5 Million Now in Mortgage Forbearance Plans

BN forbearance

  • 4.75 million borrowers in active forbearance plans (9% of all mortgages)
  • FHA/VA forbearance rate rises to 12.6% as of May 19th
  • Fannie/Freddie forbearance rate climbs to 7.1%
  • Other loan type forbearance rate (portfolio loans and private-label) up to 9.5%

First things first, some 4.75 million homeowners, or about 9.0% of all mortgages, are now in COVID-19 mortgage forbearance plans, per the company’s McDash Flash Forbearance Tracker.

That represents more than $1 trillion in unpaid principal balances, just to give you an idea of what loan servicers and the GSEs could be on the hook for.

Both FHA loans and VA loans continue to exhibit the worst levels of forbearance, at 12.6% of all loans, versus just 7.1% for GSE-backed loans (Fannie Mae and Freddie Mac).

Other types of loans, such as portfolio loans and private-label securities, have a forbearance rate of 9.5%.

While things have settled down lately, Black Knight said the pace of forbearance has risen “slightly in recent days,” with the number of active forbearances climbing by about 93,000 over the past week.

However, that’s still a ~70% decline from the 325,000 jump during the first week of May, and 93% below the first week of April when active forbearance plans surged by almost 1.4 million in just one week.

That’s to be expected though – the more borrowers in forbearance plans, the lower the percentage gains in subsequent weeks.

Borrowers Are Still Paying Their Mortgages Even Though They Don’t Have To?

  • 46% of homeowners in forbearance plans made their April mortgage payments
  • This could back up a recent study about many not actually needing the help
  • Or it could just be a timing issue that will resolve itself next month
  • Mortgage payment data from May isn’t as encouraging with just 21% paying as agreed

Perhaps more interesting is the fact that homeowners are continuing to pay their mortgages while in forbearance plans.

The company’s new “McDash Flash Payment Tracker” found that of the 4.25 million homeowners in mortgage forbearance plans as of the end of April, nearly half of them made their payment anyway.

This backs up the idea that some homeowners may be using forbearance simply as a safety net, as imposed to it being a critical need, something cited in a recent LendingTree survey.

However, before loan servicers and mortgage lenders get too excited, it could be a lot different in May.

As of May 19th, just over a fifth of homeowners in forbearance plans (21%) made their May mortgage payments.

Black Knight said roughly 1.4 million homeowners who made their April mortgage payments are at risk of “becoming past due in May if those payments are not received before the end of the month.”

Of course, past due is a bit of an overstatement since it doesn’t count as a true mortgage late, nor are credit bureaus allowed to report the borrower as delinquent.

However, you might see reports saying mortgage delinquencies spike because forborne loans are still counted as delinquencies.

So while the data from April was encouraging, it might prove to be short-lived and possibly misleading as well.

It could have just been a timing thing where these borrowers had requested forbearance around the time they made their April mortgage payments, possibly fearful they’d be shut out if they didn’t make their payment first.

Additionally, now that more details are known about how mortgage forbearance is repaid, it’s going to be a lot more attractive to those in forbearance plans.

It’ll also be enticing for those not currently in forbearance plans, who if they read up on the rules, will realize it’s a pretty sweet deal to not have to pay the mortgage for six to 12 months.

And once that period is over, they still won’t have to pay back the missed payments in a lump sum, or even enter a repayment plan.

Rather, they can just kick the can down the road and worry about the missed payments when they refinance the mortgage or sell their home thanks to COVID-19 payment deferral.

Really, it’s no worries all around because the missed payments will simply mean they get less when they sell, or wind up with a slightly higher loan balance when they refinance.

It’s such an attractive offer that I wouldn’t be surprised if homeowners went for it just to boost liquidity and put money elsewhere, possibly to earn higher returns.

We also now know that it’ll be easy to get a mortgage after forbearance too, with a waiting period of just three months for those who pause payments, and no wait for those who continue to pay as agreed.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

FHA Will Insure Mortgages in Forbearance, With a Catch

Last updated on June 23rd, 2020

The Federal Housing Administration (FHA) finally announced a new policy, which is temporary, to endorse mortgages where the borrower has requested or obtained COVID-19 forbearance.

Mortgagee Letter 2020-16 temporarily reverses the FHA’s existing policy that doesn’t permit FHA insurance for mortgages in forbearance.

The agency said the policy ensures “the safeguards of the FHA program continue to work for new homeowners facing a financial hardship due to COVID-19.”

Now before mortgage lenders get too excited about this, there is a major hitch. They must sign an indemnification agreement with the FHA that leaves them on the hook for 20% of the original loan amount if it goes bad.

What Are the Requirements for Insuring FHA Loans in Forbearance?

  • Borrower must be experiencing a financial hardship due directly or indirectly to COVID-19
  • Mortgage must have been current at time of request for forbearance
  • Mortgage must satisfy all requirements for FHA insurance at time of closing
  • Mortgagee must execute a two-year partial indemnification agreement

Aside from that pretty significant piece about lenders being liable for 20% of the original loan amount, there are also some general requirements that must be met.

First off, the borrower must be experiencing a financial hardship directly or indirectly related to COVID-19 and in a forbearance plan.

Additionally, they must have been current on the mortgage at the time they requested the forbearance.

In the letter, the FHA says “forbearance provided to borrowers experiencing a financial hardship due, directly or indirectly, to COVID-19 is not considered the provision of funds by a Mortgagee to bring and/or keep the mortgage current or to provide the appearance of an acceptable payment history.”

In other words, the loan won’t be insurable if the borrower was already behind on the mortgage before asking for a break on payments.

Like any other FHA loan, it must satisfy all requirements for FHA insurance at the time of closing.

And as mentioned, the originating lender must execute a two-year partial indemnification agreement for 20% of the original loan amount.

The somewhat good news for lenders is that they’re only on the hook for that 20% if the mortgage goes into foreclosure and results in a claim to the FHA’s Mutual Mortgage Insurance (MMI) Fund.

But it could lead to lender overlays, like higher credit scores or a max number of forborne payments, to limit the likelihood of these loans going sour.

May Have Been an Alternative to Raising Mortgage Insurance Premiums

forbearance rate

HUD Deputy Secretary Brian Montgomery said, “This policy helps address current and future capital issues for all lenders, including those who are not equipped to hold mortgages on their balance sheets for extended lengths of time.”

While maybe true, it doesn’t explain how they’ll pay those claims if lots of homes go into foreclosure in the two-year indemnification period.

However, the FHA did add that it won’t require upfront payments by lenders or an adjustment to FHA mortgage insurance premiums for such loans.

And added that it would “generally result in a reduction of the claim amount FHA would need to pay to the lender for defaulted mortgages.”

Lenders might have time on their side since the housing market is on pretty good footing and mortgage rates are super cheap, meaning housing payments should be more or less affordable.

Foreclosures also take quite a bit of time these days, so depending on when that clock starts ticking, there may not be too many claims.

Of course, I don’t know how comfortable lenders are sitting around and wondering if a home loan will go bad at some point. And it’s a two-year period to sit around and wait.

Earlier this week, the MBA said 11.82% of outstanding Ginnie Mae-backed loans (FHA/USDA/VA) loans were in forbearance, while Black Knight reported today that 12.3% of FHA/VA mortgages are now in forbearance.

But the number of homeowners in forbearance plans decreased for the first time since the crisis began, with 34,000 fewer homeowners in forbearance as of June 2nd thanks to a 43,000 decline among government-backed mortgages.

Read more: Fannie and Freddie Will Buy Loans in Forbearance

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.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

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.

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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

Forbearance rate left unchanged as exits slow

The U.S. forbearance rate was flat again last week at 5.38%, as a rise in portfolio loan and private label security forbearances offset declines for government-backed and government-insured loans, according to a survey from the Mortgage Bankers Association on Monday.

Fannie Mae and Freddie Mac once again claimed the smallest forbearance rate at 3.1% – a 1-basis-point improvement, and the lowest share the MBA has recorded for the government-sponsored enterprises since the survey began.

Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, also managed to decline by 10 basis points last week to 7.51%

However, a 22-basis-point jump in the forbearance rate of portfolio loans and private-label securities offset the declines of almost every other investor class. Overall, the share of portfolio and PLS loans in forbearance rose to 9.16% after a 26-basis-point gain the week prior.

As servicers continued to buy out delinquent loans from the Ginnie Mae pools those loans became reclassified as portfolio loans, which is beneficial in lowering Ginnie Mae’s forbearance share but inversely pushes the portfolio/PLS share upwards.


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.

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Though the forbearance rate overall remained unaltered, Mike
Fratantoni, MBA’s senior vice president and chief economist, reported the rate of exits from forbearance was at the slowest pace since the MBA began tracking exit data last summer.

As of last week, the MBA reported there are still 2.7 million borrowers in some form of forbearance, with that number remaining unchanged for nearly three months.

“Overall, the forbearance numbers have been little changed over the past few months. Homeowners still in forbearance are likely facing ongoing challenges with lost jobs, lost income, and other impacts from the pandemic,” Fratantoni said.

With improvement rates and exits slowing, data analytics company Black Knight estimates there are only 860,000 forbearance plan expirations scheduled for January and February. That’s less than the industry saw in December alone, which Black Knight said could limit potential removal activity over the next 60 days.

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.

“With weekly start volumes still hovering around 50K, the new Biden administration proposal to extend the application deadline for entering forbearance plans could benefit a significant number of homeowners,” Black Knight said in it’s monthly Mortgage Monitor report.

Based on December’s numbers, Black Knight reported there could be more than 2.5 million active forbearance plans remaining at the end of March 2021.

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

Mortgage forbearance rate continues to drop

The U.S. forbearance rate fell nine basis points last week to 5.37% of servicers’ portfolio volume, according to a survey from the Mortgage Bankers Association on Monday.

Though every investor class did manage to see a decline in rates, Fannie Mae and Freddie Mac once again claimed the smallest forbearance rate at 3.13%.

Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, have fluctuated greatly in the past several months but saw the greatest fall in portfolio share last week – down 18 basis points to 7.85%. Despite a nine basis point drop, portfolio loans and private-label securities (PLS) still boast the largest share with 8.68% share in forbearance.

Although marginal declines are taking place, the rate of exits remains much lower than what was seen in October and early November, noted Mike Fratantoni, MBA’s senior vice president and chief economist.

And borrowers are continuing to push out payments. Over 80% of total loans in forbearance are in some form of extension, up from 79% the week prior, and re-entries are also increasing.


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“Job market data continue to indicate weakness, and that means many homeowners who remain unemployed will need ongoing relief in the form of forbearance,” Fratantoni said. “While new forbearance requests remain relatively low, the availability of relief remains a necessary support for many homeowners.”

The MBA still shows data that homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments.

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.

Now, of the cumulative forbearance exits for the period from June 1, 2020 through Jan. 10, 2021, 28.8% represented borrowers who continued to pay – down from 29.1% the week prior.

During that same time period, those who exited without a loss mitigation plan in place inched up to 13.5% from 13.3% the week prior.

Source: housingwire.com