The share of mortgages in forbearance declined for the 10th straight week, for the week ending August 16, according to data released Monday by the Mortgage Bankers Association (MBA). The survey estimates there were 3.6 million homeowners in forbearance, or approximately 7.2 percent of the mortgage servicers’ total portfolio, a decrease from 7.21 percent the week prior.
Despite the positive gains, there are still some troubling future indicators that could lead to a spike in mortgage forbearances, particularly the high unemployment rate and new jobless claims.
“The share of loans in forbearance declined for the tenth week in a row, but the rate of improvement has slowed markedly,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. “The extremely high rate of initial claims for unemployment insurance and high level of unemployment remain a concern, and are indications of the challenges many households are facing.”
The share of mortgages backed by Fannie Mae and Freddie Mac also declined by one basis point to 4.92 percent, while mortgages backed by Ginnie Mae were flat at 9.54 percent. The share of portfolio loans and private-label securities in forbearance increased by 3 basis points to 10.37 percent.
“While new forbearance requests remain low, particularly for Fannie Mae and Freddie Mac loans, the pace of exits from forbearance has declined for two straight weeks,” Fratantoni said.
The survey also found that 37.91 percent of the loans in forbearance were just in the initial forbearance plan stage, while 61.34 percent were in forbearance extension.