Servicer call volume up as borrowers exit forbearance

The total number of loans in forbearance dropped by 15 bps to 3.08% as of Sept. 5, according to MBA's survey

After a slight lull, forbearance numbers across the board have started to lurch downwards, with the total number of loans dropping by 15 basis points to 3.08% as of Sept. 5, according to the Mortgage Bankers Association‘s latest survey.

The portfolio loans and private-label securities (PLS) category, which has remained stubbornly high, saw the most notable decline last week, dipping by 25 bps to 7.27%, the report said.

Meanwhile, in the race for who can get to the bottom first, Ginnie Mae loans fell by 24 bps to 3.39%, while Fannie Mae and Freddie Mac loans declined by 11 bps to 1.52%.

Mike Fratantoni, senior vice president and chief economist at the MBA, said in a statement that last week saw forbearance exits rev up to their fastest pace since March.

“The fast pace of exits outweighed the slight increase in new forbearance requests and re-entries,” said Fratantoni.

How can servicers best help borrowers as they exit forbearance?

Servicers should be communicating with borrowers early, ensuring to do so in a compliant manner by staying abreast of the current and proposed regulations, CFPB or otherwise. Alert them that they do have the option to sell their house now while in forbearance if they wish as a forbearance exit option.

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New forbearance requests increased from 0.04% to 0.05%, and reentries represented 8.2% of total loans, unchanged from the week prior, the MBA said.

Fratantoni also noted that further declines are expected in the near- term.

“Servicer call volume jumped last week as summer came to an end and many borrowers reached the end of their forbearance terms,” he said. “We anticipate a similarly fast pace of exits in the weeks ahead.”

MBA’s data revealed that servicer call volume increased to 7.7%, up from 5.8% the week prior and that the average call length was also slightly prolonged from 8.1 minutes to 8.2 minutes.

The trade group estimates that 1.5 million borrowers remain in forbearance.

Mortgage servicers need to worry about the Consumer Financial Protection Bureau (CFPB) which recently published a report that found a market increase in the share of borrowers exiting forbearance and becoming delinquent without a loss mitigation plan in place.

The report, which drew on data from 16 mortgage servicers from December 2020 to April 2021, also showed that some servicers are keeping up with the high call volume, while others are struggling to do so, causing higher wait times for some borrowers.

In a statement, the CFPB’s acting director, Dave Uejio, reiterated the agency’s chilly stance toward servicers.

“Many emergency mortgage protections are winding down, and servicers have had ample time to prepare for the millions of distressed homeowners who need their assistance,” said Uejio.

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