Mortgage rates, loan limits and forbearance

We cover the increase in conforming loan limits for Fannie and Freddie and what forbearance numbers and record-low rates could mean for the housing market.

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All loan types continued to experience drop in forbearance

But servicers are still having difficulties reaching borrowers that are exiting, Fratantoni said

The U.S. forbearance rate measuring the share of mortgages with suspended payments fell 16 basis points to 5.67% last week, with four of the five loan types dropping by double-digit basis points, according to the Mortgage Bankers Association.

The share of Fannie Mae and Freddie Mac loans in forbearance fell 17 basis points last week to 3.49% – marking the 22nd week in a row the GSEs’ forbearance rate has dropped.

The rate for Ginnie Mae loans, which include loans backed by the Federal Housing Administration, also continued their decline last week after falling 18 basis points to 7.95%.

The percentage of loans in forbearance for depository servicers, on the other hand, took the lead last week, dropping 26 basis points to 5.6%. The forbearance share for portfolio loans and private-label securities (PLS) also decreased by 12 basis points to 8.7% while the rate for independent mortgage bank (IMB) servicers decreased 8 basis points to 6.19%.

Mike Fratantoni, MBA’s senior vice president and chief economist, noted the decline in forbearance across the board aligns well with the positive news from October’s jobs report. In particular, the added 900,000 private sector jobs, and the one percentage point drop in the unemployment rate to 6.9%.

“A recovering job market, coupled with a strong housing market, is providing the support needed for many homeowners to get back on their feet,” Fratantoni said.

What subservicing looks like during a pandemic

As the world continues to navigate the impacts of COVID-19, HousingWire sat down with TMS to learn more about their customer service philosophy and why proactively educating borrowers on forbearance is essential.

Presented by: TMS

In the week prior though, the MBA said numbers remained remarkably high with an estimated 2.9 million homeowners in forbearance plans, that number now sits at 2.8 million as of last week. Approximately 22.25% of total loans in forbearance are in the initial stage, while 75.99% are in a forbearance extension. The remaining 1.76% are forbearance re-entries.

But some borrowers may be struggling to keep up, or lacking knowledge of their options. For those who have exited forbearance from the period of June 1 through Nov. 1, 12% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet – up from 10.9% the week before.

During that same period though, 31.6% of borrowers continued to make their monthly payments during their forbearance period, down from 32% the prior week.

“The data continues to show that servicers are still having difficulties reaching borrowers who have reached the six-month point of their forbearance period,” Fratantoni said. “Servicers are required to get borrowers’ consent to extend forbearance beyond six months. Homeowners who continue to be impacted by hardships related to the pandemic should contact their servicer.”

That’s not to say borrowers aren’t trying, though. As a percent of servicing portfolio volume, servicers reported calls increased from 6.7% to 8.1% last week.

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