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Mortgage

Forbearances decrease to 1.75M homeowners

Servicers’ forbearance portfolio volume dropped 26 basis points, to 3.50% in the period ending July 11

For the 20th straight week, servicers’ forbearance portfolio volume dropped — this time a staggering 26 basis points, to 3.50% in the period ending July 11, per a survey from the Mortgage Bankers Association. 

According to MBA’s estimate, 1.75 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased eight basis points to 1.83% — after decreasing eight points the previous week — and Ginnie Mae loans decreased 42 basis points to 4.36%. The forbearance share for portfolio loans and private-label securities (PLS) increased 61 basis points to 7.33%.

It’s only the third time since March that both Fannie Mae and Freddie Mac loans in forbearance were reported under 2%, and this is the largest single drop since October according to Mike Fratantoni, MBA’s senior vice president and chief economist.

“The forbearance share decreased for every investor and servicer category,” Fratantoni said. “But the latest economic data regarding the job market and consumer spending continue to show a robust pace of economic recovery, which is supporting further improvements in the forbearance numbers as more homeowners are able to resume their payments.”


How can servicers best support homeowners as they reach maximum forbearance?

HW Media CEO Clayton Collins recently spoke with Xome CEO Mike Rawls about the challenges servicers are navigating and how they can set themselves and their homeowners up for success as people reach the end of their maximum forbearance.

Presented by: Xome

Earlier this year, the White House said in a statement 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, 9.8% of total loans in forbearance are in the initial plan stage, while 83.4% are in a forbearance extension — up from 82.7% last week. The remaining 6.8% are re-entries.

Of the cumulative exits for the period from June 1, 2020, through July 11, 2021, over a quarter (28%) resulted in loan deferrals or partial claims. Another 23.2% represented borrowers who continued to make their monthly payments during their forbearance period, down from 23.5% last week.

Roughly 15.7% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place. 10.7% resulted in a loan modification or trial loan modification.

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