Mortgage

Forbearance rate dips to 1.67% in November

The vast majority of homeowners have exited their forbearance plan, the MBA numbers reveal

The share of mortgage loans in forbearance decreased by 39 basis points to 1.67% as of Nov. 30, according to the Mortgage Bankers Association (MBA), the latest sign that the sun is setting on loan forbearance agreements hammered out under the CARES Act.

Under COVID-19 legislation signed by President Donald Trump in April 2020, many homeowners could strike deals with their lenders on a year-long or up to 18-month forbearance plan. With many such plans expiring, forbearance fell across the board.

Just 835,000 homeowners are still in forbearance plans, according to the MBA, after a COVID-era peak of over 4 million borrowers.

The most notable decline was in the portfolio loans and private-label securities (PLS), which dipped 106 basis points to 3.94%.

Ginnie Mae loans decreased by 42 bps to 2.10% of the total. Meanwhile, Fannie Mae and Freddie Mac loans in forbearance declined 16 basis points to 0.76% in November.  


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“The share of loans in forbearance in November declined — albeit at a slower pace than October — as borrowers continued to near the expiration of their forbearance plans and moved into permanent loan workout solutions.” said Marina Walsh, MBA’s vice president of industry analysis, in a statement  

The survey included data on 36.5 million loans serviced as of Nov. 30, 73% of the first-mortgage servicing market. The MBA numbers show that 18.3% of total loans in forbearance were in the initial stage last month, and 68.4% were in a forbearance extension. The remaining 13.3% were re-entries.

During the last 17 months (from Jun. 2020 to Nov. 2021), MBA’s data revealed that 29.1% of forbearance exits resulted in a loan deferral or partial claim. Also, 19.9% represented borrowers who continued to pay during the forbearance period.

However, 16.8% were borrowers who did not make their monthly payments and did not have a loss mitigation plan. In addition, 14.1% resulted in a loan modification or a trial loan modification.

The analysis of the post-forbearance landscape shows that 83.7% of the total completed loan workouts since 2020 were current in November, down from 84% in October. 

“While there was some deterioration in the performance of borrowers in post-forbearance workouts, four out of five overall remained current through November,” Walsh said. 

Regarding the servicing industry in general, total loans not delinquent or in foreclosure nudged up from 94.3% of the servicing portfolio volume in October to 94.6% in November, reflecting a faster wage growth and the unemployment rate dropping to 4.2%, according to Walsh. 

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