Mortgage Loans in Forbearance Decrease for Eighth Week in a Row

The Mortgage Bankers Association’s (MBA) Forbearance and Call Volume Survey for August 10th, revealed that the total number of loans now in forbearance decreased by 23 basis points from 7.67% of servicers’ portfolio volume in the prior week to 7.44% as of August 2, 2020. According to MBA’s estimate, 3.7 million homeowners are in forbearance plans. The share of Fannie Mae and Freddie Mac loans in forbearance dropped for the ninth week in a row to 5.19% – a 22-basis-point improvement. Ginnie Mae loans in forbearance decreased by 22 basis points to 10.06%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased by 25 basis points to 10.12%. Independent mortgage bank servicers – at 7.71% – surpassed depository servicers (7.63%) for the highest share of loans in forbearance. In a prepared statement, Mike Fratantoni, MBA’s Senior VP and Chief Economist said, “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. New forbearance requests increased, but are still well below the level of exits.” Fratantoni went onto say, “The job market data in July came in better than expected. 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.”