GSE forbearance rate now at just 1.38%

The total number of loans in forbearance declined by 7 bps to 2.89%, according to the MBA

Servicers’ forbearance portfolio volume declined at a faster pace last week, as mortgage holders exit COVID-19 plans, according to the Mortgage Bankers Association (MBA). And exits are expected to pick up the pace even more over the next few weeks.

The total number of loans in forbearance decreased by seven basis points to 2.89% as of Sept. 26. In the previous week, the rate dropped four basis points to 2.96%, hitting pre-pandemic levels.

Last week, all categories showed declines. The most notable case was in the portfolio loans and private-label securities (PLS) category, dipping by 14 bps to 6.77%

For depository servicers, the percentage declined 13 bps to 2.93%. The share of independent mortgage bank loans in forbearance fell five basis points to 3.19%.

Fannie Mae and Freddie Mac loans dropped by six basis points to 1.38%. Meanwhile, Ginnie Mae loans in forbearance dropped seven bps, to 3.35% of servicers‘ portfolio volume.

Per the MBA’s estimate, 1.4 million homeowners are still in active forbearance plans. The survey included data on 36.8 million loans serviced as of Sept. 26, 74% of the first-mortgage servicing market.

Mike Fratantoni, senior vice president and chief economist at the MBA, said in a statement that the number of homeowners in forbearance is expected to drop sharply over the next few weeks as many are reaching the 18-month expiration point of their forbearance terms.

“Most borrowers exiting forbearance through a workout are opting for a deferral plan, which allows them to resume their original payment, while moving the forborne amount to the end of the loan,” he said.

During the last 15 months, MBA’s data revealed that 28.9% of exits resulted in a loan deferral or partial claim. Also, 21.7% represented borrowers who continued to pay during the forbearance period.
However, 16.1% were borrowers who did not make their monthly payments and did not have a loss mitigation plan.

The survey shows that 12.4% of total loans in forbearance were in the initial stage last week, and 78.7% were in a forbearance extension. The remaining 8.9% were re-entries.

Total requests were at 0.04% of servicing portfolio volume, while exits represented 0.12% of the total – in the previous week, the share was 0,10%, the report said.

Servicer call volume decreased to 5.9% last week, down from 7.9% the week prior. According to Fratantoni, although call volume dropped, “servicers will be very busy through October.”

According to CoreLogic, more than 1.2 million mortgage holders exited forbearance plans at the end of September, 18 months after the passage of the CARES Act, which provided millions of homeowners the protection of payments.

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