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Mortgage

Forbearance slides to 4.47% after a lackluster week of exits

MBA estimates 2.23 million homeowners are still in some form of forbearance

The total number of servicers’ loans in forbearance fell for the ninth straight week. However, due to a slowdown in exits, forbearance portfolio volume dipped just two basis points last week to an average of 4.47%, according to the Mortgage Bankers Association.

Several investor types were down by just a single digit basis points, with Fannie Mae and Freddie Mac loans falling two points to 2.42%, while Ginnie Mae loans slid seven basis points to 6.02%.

On the other hand, the forbearance share for portfolio loans and private-label securities (PLS) increased by 13 basis points to 8.55%.

“The increase in the forbearance share for portfolio and PLS loans highlights both the ongoing buyouts of delinquent loans from Ginnie Mae pools as well as an increased share for other loans that are not federally backed,” said Mike Fratantoni, MBA’s senior vice president and chief economist.

Overall, the uneven scale of entries and expirations pushed the rate of exits to the lowest level since February, the MBA said. By stage, 12.8% of total loans in forbearance are in the initial forbearance plan stage, while 82.3% are in a forbearance extension. The remaining 4.9% are forbearance re-entries.

Of the cumulative forbearance exits for the period from June 1, 2020, through April 25, 2021, 25.3% represented borrowers who continued to make their monthly payments during their forbearance period. For months now this number has been inversely dropping against a rising percentage of borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet — which is back up to 14.6% as of last week.

However, a shift in the past month saw the greater population of exits were those that resulted in loan deferral/partial claim. Last week those loans reached 27% of exits. Since the MBA began tracking these numbers, up-to-date borrowers had previously always made up the greatest share, though it is likely the population of the borrowers left in their plans are those that needed aid the most.

While exits have been lackluster the previous two weeks, a number of dates are on the horizon for large scale exits (or at least reviews) of forbearance plans.

According to data analytics provider Black Knight, about 890,000 exit plans, many of which will be 15-month reviews for early forbearance entrants, will take place in June. This will represent the last round of quarterly reviews before the first wave outstanding forbearance plans is slated for their 18-month – and as for now, final – expiration at the end of September, Black Knight noted.

While servicers continue to help work through the 2.23 million homeowners the MBA estimates are still in forbearance plans, Fratantoni is confident the economy is ready for a return to normalcy.

“Job market and housing market data remain strong. We expect that further gains in hiring will help to support many homeowners as they exit forbearance in the months ahead,” Fratantoni said.

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