Forbearances fall under 5% for first time in a year

The share of loans in forbearance nationwide has fallen to 4.96%, marking a milestone not reached since for 12 months, according to the Mortgage Bankers Association (MBA).

“The share of loans in forbearance decreased for the fourth straight week, dropping below 5% for the first time in a year,” said Mike Fratantoni, senior vice president and chief economist at the MBA. “New forbearance requests remained at their lowest level since last March, and the pace of exits increased.”

The current share of mortgages in forbearance is down 9 basis points (bps) from 5.05% of servicers’ portfolio volume one week prior. Per MBA’s estimates, 2.5 million homeowners are presently in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased to 2.77% – a 6-basis-point improvement. Ginnie Mae loans in forbearance fell 20 bps to 6.83%, while the forbearance share for portfolio loans and private-label securities decreased by 1 bp to 8.90%. The share of loans in forbearance for independent mortgage bank (IMB) servicers fell 14 bps to 5.23%, and the percentage of loans in forbearance for depository servicers decreased 5 bps to 5.10%.

By stage, 13.8% of total loans in forbearance are in the initial forbearance plan stage, while 83.4% are in a forbearance extension. The remaining 2.8% are forbearance re-entries.

Fratantoni noted that a number of homeowners remain in forbearance plans that began at the onset of the pandemic, with more than 17% of borrowers in forbearance extensions now exceeding the 12-month mark.

“Many homeowners need this support, even as there are increasing signs that the pace of economic activity is picking up as the vaccine rollout continues,” Fratantoni said. Those who have an ongoing hardship due to the pandemic and want to extend their forbearance beyond the 12-month point need to contact their servicer. Servicers cannot automatically extend forbearance terms without the borrower’s consent.”


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