GSE forbearance rate declines to 1%

Servicers’ forbearance portfolio volume declined at a reduced pace this week, as mortgage holders continue to exit COVID-19 plans, according to the Mortgage Bankers Association (MBA).  

The total number of loans in forbearance decreased by seven basis points to 2.21% as of Oct. 17. In the previous week, the rate dropped 34 basis points to 2.28%.   

Last week, all categories showed declines. But Fannie Mae and Freddie Mac loans in forbearance achieved the 1% level for the first time since the beginning of the pandemic, after dropping by five basis points. Meanwhile, Ginnie Mae loans decreased by 5 bps to 2.72%  

The most notable decline was in the private-label securities (PLS) portfolio, which dipped 13 basis points to 5.21%. The share of independent mortgage bank loans in forbearance fell eight basis points to 2.49%. For depository servicers, the percentage declined 5 bps to 2.11%.

Per the MBA’s estimate, 1.1 million homeowners are still in active forbearance plans. The survey included data on 36.7 million loans serviced as of Oct. 17, 73% of the first-mortgage servicing market.

According to Mike Fratantoni, MBA’s senior vice-president and chief economist, “as reported in the past, many servicers process forbearance exits at the beginning of the month, therefore it is not surprising to see the pace of exits slow again mid-month.”

The survey shows that 15.3% of total loans in forbearance were in the initial stage last week, and 74.8% were in a forbearance extension. The remaining 9.9% were re-entries. Weekly call volume for servicers was up, from 7.4% the week prior to 7.7%.

“The composition of loans in forbearance is evolving. More than 25% of loans in forbearance are now made up of new forbearance requests and re-entries, while many other homeowners who have reached the end of 18-month terms are successfully exiting into deferrals or modifications,” he said.

During the last 15 months, MBA’s data revealed that 29.1% of exits resulted in a loan deferral or partial claim. Also, 20.7% represented borrowers who continued to pay during the forbearance period. However, 16.7% were borrowers who did not make their monthly payments and did not have a loss mitigation plan.

Total requests were at 0.04% of servicing portfolio volume, while exits represented 0.10% of the total – in the previous week, the share was 0,33%, the report said.    

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