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Home appraisal’s ugly history and uncertain future

This is Part I of a deep dive into the home appraisal industry. Today we explore the origins of the appraisal industry and its current lack of diversity.

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Steady exits push forbearance rate down to 5.05%

The MBA estimates 2.5 million homeowners are still in some form of forbearance

With just more than a week away from the one-year anniversary of the CARES Act, new forbearance requests dropped to their lowest level since March of 2020, pushing the total number of loans in forbearance down nine basis points to 5.05% of servicers’ portfolio volume, the Mortgage Bankers Association said on Monday.

Alongside a dampening of requests, exits maintained a standard pace with over 100,000 homeowners having exited forbearance within the past month. The MBA now estimates 2.5 million homeowners are in some form of forbearance.

Exits also shrunk the share of loans in forbearance across all investor categories last week, with Fannie Mae and Freddie Mac loans dropping to 2.83% – a five-basis-point improvement.

Ginnie Mae loans in forbearance decreased 13 basis points to 7.03%, while the forbearance share for portfolio loans and private-label securities (PLS) decreased by 14 basis points to 8.91% – a positive economic sign as loans bought out of Ginnie Mae pools typically get transferred into portfolios for rehabilitation.

Of the cumulative forbearance exits for the period from June 1, 2020, through March 14, 2021, 27.1% represented borrowers who continued to make their monthly payments during their forbearance period, however, that number has slowly decreased for months now. On the other end of the spectrum, borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place, rose to 14.2%.

Increasing Lending and Servicing Capacity – Regardless of Rates

The low-rate environment won’t last forever, and both lenders and servicers need to be able to keep their costs down while managing volume fluctuations once things start to normalize.

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“More than 11% of borrowers in forbearance have now exceeded the 12-month mark,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “We anticipate that servicers will be busy over the next month, with many homeowners opting for the extension for up to 18 months recently made available for federally-backed loans.”

But as servicers continue to work with borrowers through possibly August 2022, Fratantoni is hopeful the pace of economic activity will pick up as the vaccine rollout continues.

“We expect that a stronger job market will help many successfully exit forbearance in the months ahead,” Fratantoni said.

Overall, it seems borrowers may be gaining confidence in the rebounding economy. The number of calls to servicers’ call centers, average speed to answer, abandonment rate and average call time decreased across the board last week.

A recent study from Freddie Mac also revealed borrowers are more confident in their ability to pay their mortgage. Confidence in the housing market has fluctuated between 48% in April and 69% in October, and averaged 60% in 2020. As of February 2021, confidence has risen to 66%.

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