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.
While this decline may be the largest drop in forbearance share in the past nine weeks, it is only the second in that same time period – the first being on Dec. 14 when loans in forbearance fell six basis points to 5.48%. Dec. 14 also marked the first time the number of homeowners in some form of forbearance fell to 2.7 million, and the MBA estimates that number has gone unchanged in the last month.
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.
Last week marked the twelfth consecutive week servicers’ portfolio share hovered between 5% and 6% – the longest a percentage range has held since the survey’s origins in May.
“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.