The total number of mortgage loans in forbearance declined by 6 basis points from 7.80 percent the previous week to 7.74 percent, marking the sixth consecutive week of declines, according to the Mortgage Bankers Association’s (MBA) latest forbearance and call volume survey.
In the MBA’s previous forbearance and call volume survey for data ending on July 12, 2020, total mortgage loans in forbearance had dropped by 38 basis points.
The organization’s most recent estimates place the number of homeowners in forbearance plans at about 3.9 million homeowners.
Fannie Mae and Freddie Mac loans in forbearance likewise continued to drop this week for the seventh week in a row to 5.49 percent from 5.64 percent the previous week.
Ginnie Mae loans in forbearance, however, increased slightly last week from 10.26 percent the week prior to 10.27 percent. Portfolio loans and private-label securities (PLS) also increased from 10.41 percent the previous week to 10.53 percent.
Loans in forbearance for depository servicers decreased to 8.06 percent from 8.23 percent the week before, while loans in forbearance for independent mortgage bank (IMB) servicers increased from 7.83 percent the week prior to 7.85 percent.
“The share of loans in forbearance declined by a smaller amount than in previous weeks, as the pace of borrower exiting forbearance slowed,” Mike Fratantoni, senior vice president and chief economist at MBA, said in a statement. “Although the GSE portfolio of loans in forbearance should continue to improve, Ginnie Mae’s portfolio saw an uptick of both loans in forbearance and borrowers requesting forbearance. The high level of unemployment claims in recent weeks may be playing a role, as weakness would likely impact Ginnie Mae’s portfolio first.”
Recent loan buyouts by bank servicers have also effected Ginnie Mae forbearance numbers.
“As a result of large buyouts from Ginnie Mae pools in recent weeks, many FHA and VA loans are now being held as portfolio loans by bank servicers,” Fratantoni added. “That is why the share of portfolio loans in forbearance has increased and is now typically at a higher level than that for Ginnie Mae loans.”
Total weekly forbearance requests as a percent of servicing portfolio volume remained the same as the previous week at 0.13 percent. Calls as a percent of servicing portfolio volume increased during this period from 8.3 percent the week before to 9.0 percent.
Soon, however, many homeowners stand to lose federal unemployment benefits that had been enacted through the CARES Act, which are set to expire at the end of July. Until the government issues another stimulus package, total forbearance numbers could potentially reverse course and start to rise again once individuals no longer have the boost to their income.