The share of mortgage loans in forbearance ticked down slightly in March, but the percentage of troubled loans remained above year-ago levels, according to a monthly loan monitoring survey by the Mortgage Bankers Association (MBA).
The MBA’s survey found the total number of loans in forbearance fell 2 basis points from 0.38% of servicers’ portfolio volume in February to 0.36% of portfolio volume at the end of March. The MBA estimates that 180,000 homeowners are in forbearance plans, which is a temporary postponement of mortgage loan payments. It is an alternative to forcing a property into foreclosure or leaving the borrower in default.
The MBA estimates that mortgage servicers have provided about 8.6 million forbearances since March 2020.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.13% for the month. Ginnie Mae loans in forbearance decreased 1 basis point to 0.83%. The forbearance share for portfolio loans and private-label securities decreased 4 basis points to 0.33%.
Marina Walsh, MBA’s vice president of industry analysis, said in a press release that the labor market remains healthy, which is helping mortgage performance to remain strong. However, compared to one year ago, there are fewer borrowers current on their mortgages. Also, there are more borrowers in loan workouts, which is a renegotiation of terms for a loan in default, and they are having greater trouble staying current.
“Overall mortgage performance improved in March, with more borrowers making their mortgage payments and fewer borrowers in forbearance and loan workouts compared to the prior month,” stated Walsh in the press release. “This monthly improvement may be tied to several factors such as receipt of tax refunds and homeowner recovery from natural disasters.”
The five states with the lowest share of March loans that were current as a percentage of servicing portfolios were Louisiana, Mississippi, Indiana, West Viriginia and Alabama. The five states with the highest share of loans that were current in March were Washington, Idaho, Alaska, Oregon and Colorado.
