The MBA estimates 1.9 million homeowners are still in some form of a forbearance plan.
The share of Fannie Mae and Freddie Mac loans in forbearance also decreased three basis points to 1.99%, and Ginnie Mae loans decreased three basis points to 5.10%. The forbearance share for portfolio loans and private-label securities (PLS) decreased five basis points to 7.92%.
This is the first time since March that both Fannie Mae and Freddie Mac loans in forbearance dropped below 2%, said Mike Fratantoni, MBA’s senior vice president and chief economist.
“The rate of forbearance exits and new forbearance requests remained at low levels, but we expect the pace of exits to increase with reporting next week for the beginning of July,” Fratantoni said. “Strong job growth in June should provide a springboard for further improvements in the numbers over the next month.”
Servicers should be communicating with borrowers early, ensuring to do so in a compliant manner by staying abreast of the current and proposed regulations, CFPB or otherwise. Alert them that they do have the option to sell their house now while in forbearance if they wish as a forbearance exit option.
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Last week, the White House said in a statement that three federal agencies that back mortgages — the United States Department of Agriculture (USDA), the Department of Veterans Affairs (VA) and the Department of Housing and Urban Development (HUD) — would extend the pandemic-related foreclosure ban until July 31. The Federal Housing Finance Agency, which oversees Fannie and Freddie, said it will similarly extend its limit through the end of July.
This latest extension will be the last one, per the Biden Administration.
By stage, 10.8% of total loans in forbearance are in the initial plan stage, while 82.9% are in a forbearance extension. The remaining 6.3% are re-entries.
Of the cumulative exits for the period from June 1, 2020, through June 27, 2021, over a quarter (27.9%) resulted in loan deferrals or partial claims. Another 23.9% represented borrowers who continued to make their monthly payments during their forbearance period.
Roughly 15% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place. About 10% resulted in a loan modification or trial loan modification.