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Mortgage servicers take steps to support borrowers amid COVID

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.

Mortgage

A slowdown in exits pushes forbearance volume up

Ginnie Mae buyouts and an uptick in requests drive forbearance volume in portfolio and PLS loans

After one month of steady declines, servicers’ forbearance portfolio volume rose one basis point last week to 5.23%, according to data released Monday by the Mortgage Bankers Association. The trade group pointed to a slowdown in exits coupled with an uptick in requests for last week’s increase.

Once again, Fannie Mae and Freddie Mac boasted the smallest forbearance share with servicers’ portfolios remaining unchanged from the week prior at 2.97%.

Portfolio loans and private-label securities (PLS), however, increased by nine basis points to 9.03%, while Ginnie Mae loans in forbearance rose three basis points to 7.35%.

According to Mike Fratanoni, MBA’s senior vice president and chief economist, Ginnie Mae buyouts and general forbearance gains were most likely what drove the uptick for portfolio and PLS loans.

Since November, observers have taken note that forbearances have increased slightly at the very beginning and end of the month. But what’s happening with portfolio loans is even more striking – the percentage of portfolio loans in forbearance has hovered between 5% and 6% since October, the longest a percentage range has held since the survey’s beginning.


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Presented by: Angel Oak

The MBA has expressed concern that the longer borrowers stay in forbearance, the less likely they’ll skate by without needing assistance. The FHA and FHFA have been kicking the forbearance can further down the road for months now, giving more borrowers time to recover. But servicers have limited options to date.

On Feb. 25, the FHFA announced borrowers with mortgages backed by Fannie and Freddie may be eligible for an additional forbearance  extension of up to six months. Borrowers who are on a COVID-19  forbearance plan as of Feb. 28, 2021, can now take 18 months of forbearance and may cover some borrowers all the way through Aug. 31, 2022.

Following the extension, MBA President and CEO Bob Broeksmit applauded the FHFA’s decisions to align itself with HUD, the USDA and the VA for the GSE’s policies. He noted the new provisions should help assist mortgage servicers in streamlining their offerings to provide relief for homeowners.

However, even if more time was given to borrowers, servicers’ call centers reported a week-over-week decline from 9.3% to 7.9%, while abandonment rate of those calls also jumped from 6% to 7.6%.

The winter storm that impacted Texas and other states did lead to some temporary disruptions at servicer call centers, Fratantoni said. But these centers quickly returned to full operations.

Overall, the MBA estimates 2.6 million borrowers are still in some form of forbearance. About 28% of those represent borrowers who continued to make their monthly payments during their forbearance period. Borrowers who did not make all of their monthly payments and
exited forbearance without a loss mitigation plan in place accounted for almost 14%.

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