The share of mortgage loans in forbearance dropped from 7.67 percent of servicers’ portfolio volume the previous week to 7.44 percent for the week ending August 2, according to the Mortgage Bankers Association’s (MBA) latest forbearance and call volume survey, released Monday.
This week marks the eighth week in a row in which total loans in forbearance have declined. Currently, there are about 3.7 million homeowners enrolled in forbearance plans.
Fannie Mae and Freddie Mac loans in forbearance decreased for the ninth consecutive week from 5.41 percent to 5.19 percent. Ginnie Mae loans in forbearance dropped from 10.28 percent the previous week to 10.06 percent, a reversal from MBA’s two previous forbearance reports, which both showed gradual increases in the servicer’s loans in forbearance over consecutive weeks.
Portfolio loans and private-label securities (PLS) in forbearance declined from 10.37 percent the week prior to 10.12 percent. Independent mortgage bank (IMB) servicers loans in forbearance decreased from 7.81 percent the previous week to 7.71 percent. Depository servicers’ loans in forbearance also decreased from 7.95 percent the week before to 7.63 percent.
“The share of loans in forbearance declined at a more rapid pace last week, with many borrowers who had been making payments while in forbearance deciding to exit,” Mike Fratantoni, senior vice president and chief economist of MBA, said in a statement. “New forbearance requests increased, but are still well below the level of exits. Some of the decline in the share of Ginnie Mae loans in forbearance was due to additional buyouts of delinquent loans from Ginnie Mae pools, which result in these FHA and VA loans being reported in the portfolio category.”
As of this latest MBA survey, 40.87 percent of total loans in forbearance are in the initial forbearance plan stage, 58.43 percent are in a forbearance extension, and 0.70 percent are forbearance re-entries.
Although the total forbearance rates have projected a sunny outlook over the past several weeks as overall rates continue to decline, it’s unclear whether or not that will remain the case, as the future of a second federal stimulus plan remains uncertain.
“The job market data in July came in better than expected,” Fratantoni added. “However, the unemployment rate is still quite high, and the elevated level of layoffs and slowing pace of hiring will make it more difficult for borrowers to get back on track — particularly if there is not an extension of relief.”