Forbearance rate drops below 1.5%

The total number of loans in forbearance decreased by 26 basis points to 1.41% in December

Servicers’ forbearance portfolio volume dropped in December to a level below 1.5% for the first time in 18 months. The total number of loans in forbearance decreased by 26 basis points, to 1.41% in December from 1.67% in November, according to the Mortgage Bankers Association (MBA).

The most notable decline was in the portfolio loans and private-label securities (PLS) category, dipping by 51 basis points to 3.43%. Ginnie Mae loans in forbearance decreased 47 bps, at 1.63% of servicers’ portfolio volume. Meanwhile, Fannie Mae and Freddie Mac loans dropped by eight basis points to 0.68%.  

The survey included data on 36.5 million loans serviced as of Dec. 31, 73% of the first-mortgage servicing market.

Marina Walsh, MBA’s vice president of industry analysis, said in a statement that, with the number of borrowers in forbearance continuing to decrease below 750,000, the pace of monthly forbearance exits reached its lowest level since MBA started tracking exits in June 2020.   

Total forbearance requests were 0.15% of servicing portfolio volume in December, while exits represented 0.39% of the total. The survey also shows that 23.2% of total loans were in the initial stage last month, and 63.1% were in a forbearance extension. The remaining 13.7% were re-entries.

“It is likely that the remaining borrowers in forbearance have experienced either a permanent hardship that may require more complex loan workout solutions, or they have encountered a recent hardship for which they are now seeking relief,” Walsh added.

During the last 18 months, MBA’s data revealed that 29.1% of exits resulted in a loan deferral or partial claim. Also, 19.5% represented borrowers who continued to pay during the forbearance period. However, 16.9% were borrowers who did not make their monthly payments and did not have a loss mitigation plan.

The survey also shows that loans serviced not delinquent or in foreclosure were 94.85% in December, up from 94.58% in November.  

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