Mortgage Loans in Forbearance Decrease for Fifth Week in a Row

The Mortgage Bankers Association’s (MBA) Forbearance and Call Volume Survey for July 20th, reports that the total number of loans now in forbearance decreased by 38-basis points from 8.18% of servicers’ portfolio volume in the prior week to 7.80% as of July 12th, 2020. According to MBA’s estimate, almost 3.8 million homeowners are in forbearance plans. The share of Fannie Mae and Freddie Mac loans in forbearance dropped for the sixth week in a row to 5.64%, a 43-basis-point improvement. Ginnie Mae loans in forbearance decreased 30 basis points to 10.26%. The forbearance share for portfolio loans and private-label securities (PLS) decreased by 52 basis point to 10.41%. The percentage of loans in forbearance for depository servicers dropped to 8.23%, while the percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased to 7.83%. In a prepared statement Mike Fratantoni, MBA’s Senior VP and Chief Economist said, “The share of loans in forbearance dropped to its lowest level in over two months, driven by an increase in the pace of exits as more homeowners have been able to get back to work. The decline in the forbearance share was broad based, with decreases for GSE, Ginnie Mae, and portfolio/PLS loans.” Fratantoni went on to say that, “Almost half of borrowers remaining in forbearance are now in an extension of the original term, while the remainder are in their initial forbearance plan. The pace of new forbearance requests remains quite low compared to earlier in the crisis, but we are watching carefully for any increases due to either the pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance benefits at the end of this month.”