The total number of loans in forbearance fell for the sixth week in a row to 7.74% of servicers’ portfolio volume, according to a report by the Mortgage Bankers Association. As the country braces for the end of moratoriums and unemployment benefits under the CARES Act, the MBA estimates 3.9 million homeowners are in forbearance plans.
The share of mortgages in forbearance backed by Fannie Mae and Freddie Mac dropped for the seventh week in a row to 5.59% – another three-month low for the GSE’s.
According to the report, the pace of borrowers exiting forbearance slowed last week as homeowners wait for deliberation of the HEROES Act, which would grant a 60-day mortgage forbearance automatically if their mortgage became 60 days delinquent between March 13 and the day the bill was enacted.
Despite falling 30 basis points the week prior, Ginnie Mae securities – mortgages backed by the Federal Housing Administration, the Veterans Administration, and the U.S. Department of Agriculture – rose slightly by 1 basis point last week to 10.27%.
Recent increases in unemployment claims are a likely factor of Ginnie Mae’s portfolio experiencing an uptick in both loans in forbearance and borrowers requesting forbearance, said Mike Fratantoni, MBA’s senior vice president and chief economist.
The forbearance share for portfolio loans and private-label securities also increased by 12 basis points to 10.53%.
“As a result of large buyouts from Ginnie Mae pools in recent weeks, many FHA and VA loans are now being held as portfolio loans by bank servicers,” Fratantoni said. “That is why the share of portfolio loans in forbearance has increased and is now typically at a higher level than that for Ginnie Mae loans.”
There’s also been a pick-up in calls to mortgage servicers from borrowers, the MBA report said. Measured as a percent of servicing portfolio volume, calls increased for the third week in a row to 9% from 8.3%, while the average call length fell to 7.2 minutes from 7.6 minutes.