The total number of mortgage loans in forbearance decreased by two basis points month over month in February to 0.38% of the servicers’ portfolio volume, according to estimates by the Mortgage Bankers Association (MBA). However, the percentage of total loans in forbearance increased from 0.22% one year ago.
An estimated 190,000 homeowners are in forbearance, which are temporary postponements of loan payments as an alternative to forcing properties into foreclosures. Ginnie Mae loans in forbearance decreased in February to 0.84%, down from 0.88% in January. The share of Fannie Mae and Freddie Mac loans in forbearance decreased to 0.15% in February, from January’s level of 0.15%.
Of borrowers in forbearance, 73% have claimed temporary hardship caused by job loss, death, divorce or disability. Another 24.2% are in forbearance because of natural disasters. The remaining 2.8% are still in forbearance because of COVID-19.
About 63% of total loans in forbearance are in the initial forbearance plan stage, while 18.2% are in a forbearance extension. The remaining 18.8% are forbearance re-entries, including re-entries with extensions.
“Despite February’s monthly decline of loans in forbearance, the estimated number of forbearances and loan workouts increased compared to one year ago,” said Marina Walsh, MBA’s vice president of industry analysis. “The year-over-year gain may be attributed to increasing escrow payments for taxes and insurance, inflationary pressures, natural disasters, aging servicing portfolios and a softening in the labor market. At the same time, the performance of loan workouts and overall servicing portfolios weakened compared to one year ago.”
