Forbearance numbers dip slightly as exits slow

Forbearance numbers dip slightly as exits slow
The total number of loans in forbearance remained relatively unchanged, declining by one basis point to 3.25% as of Aug. 15, according to the Mortgage Bankers Association’s latest tally. Though the drop is more subdued than in previous weeks, the decline continues a downward trend across most categories.

Fannie Mae and Freddie Mac loans decreased by three bps from 1.69% to 1.66%, while Ginnie Mae loans dropped three bps to 3.92%, the MBA said.

However, the portfolio loans and private-label securities (PLS) share remained elevated, increasing 10 bps to 7.15%.  

Mike Fratantoni, senior vice president and chief economist at the MBA, noted that “Portfolio and PLS loans now account for almost 50% of all depository servicer loans in forbearance…which highlights the importance of the investor category.”

Fratantoni also said that the muted results of the survey are in part due to a slower pace of new requests and exits compared to a year prior.

How proactive communication can reduce the risk of foreclosure

As borrowers impacted by COVID-19 continue to exit mortgage forbearance, now is the time for lenders and servicers to be proactive in their borrower outreach to reduce foreclosure volume.

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“In fact, exits were at their slowest pace in over a year,” he added. (The volume of weekly forbearance requests decreased from 0.06% to 0.05%.)

The trade group estimates that currently 1.6 million borrowers are in forbearance.

Meanwhile, the survey shows that 10% of total loans are in the initial forbearance stage and that 82.3% are in a forbearance extension. The remaining 7.7% are forbearance re-entries, the MBA said.

Out of the borrowers who exited forbearance from June 1, 2020 through Aug. 15, 2021, 28.3% opted for a loan deferral/partial claim and 22.6% continued making their monthly payments during their forbearance period.

Despite numerous loss mitigation options offered by the FHA and the FHFA, 16.1% of borrowers who exited forbearance during this time period did not make their monthly payments while in forbearance and exited forbearance without a loss mitigation option in place, the survey said.

Weekly servicer call center volume was also muted relative to the prior week, with the percent of calls decreasing from 7.5% to 7.3%, the MBA concluded.
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