Fewer Americans needed to enter a mortgage hardship plan in December but the overall percentage of loans in forbearance remains elevated and will probably rise, the Mortgage Bankers Association reported.
About 235,000 homeowners were in forbearance at year’s end, MBA said. That represented about 0.47% of servicers’ portfolio volume, down 3 basis points from the November level.
Yet, the share of mortgages in forbearance is higher than it was six months ago due to the hurricanes in the Southeast and will likely rise with the wildfires raging around Los Angeles, MBA said.
“Even with the slight decrease, the level of forbearance is higher than it was six months ago across all loan types and the performance of servicing portfolios and loan workouts has weakened,” said Marina Walsh, MBA’s vice president of industry analysis.
At year’s end, nearly 43% of borrowers in forbearance were there due to a natural disaster, Walsh said.
“Given the disruption and devastation caused by the California wildfires, that share will likely move higher in the months ahead, as homeowners turn to forbearance,” she added.
